Everything You Need To Know About Google Ads Bidding Strategies

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There are many alternative bid strategies in Google Ads, and choosing the ideal one for your campaigns and marketing objectives might be challenging. All bidding options come with benefits and drawbacks. This article aims to give you an overview of them and their advantages and disadvantages.

What is Search Engine Marketing?

Search engine marketing is a type of online marketing strategy that aims to boost the exposure of products and services in search engine results pages (SERPs), primarily with paid advertising.

What Are The Different Types Of Bidding Options In Search Engine Marketing?

Cost-per-click (CPC)

With cost per click or CPC, advertisers pay a specific amount to the search engine each time their ad gets clicked. It's the most popular bidding option we see in search engine marketing. 

Pros:

  • You can choose a maximum CPC bid, the highest amount you're ready to pay for a click.
  • CPC bidding is adequate for driving leads or sales from SEM campaigns
  • You only pay once somebody clicks on your ads.

Cons:

  • Expensive for a competitive market
  • A low click-through rate may lead to paying more per lead or sale.
Enhanced Cost Per Click (ECPC)

ECPC is a somewhat automated bidding strategy that builds on the CPC bidding strategy. Like CPC, you only pay when you get a click. What makes it enhanced is that it automatically adjusts your bids to try and get as many conversions as possible within the fixed campaign budget.

Pros:

  • ECPC is a conversion-focused bidding strategy.
  • It gets you more conversions than manual bidding by automatically adjusting your bids for clicks that seem more or less likely to lead to a sale or conversion.
  • Partially automated, with some level of manual control.
  • More time-efficient than manual CPC

Cons: 

  • Less control than manual CPC
  • Increase in cost per click.
  • You will need to set up conversion tracking and have a reasonable conversion history for your campaign.
Cost Per Thousand Impressions (CPM)

Cost per thousand impressions (CPM), sometimes known as the cost per mille, is a marketing phrase that refers to the cost of 1,000 advertisement impressions on one web page.

Pros:

  • Good for increasing brand awareness
  • Less expensive than CPC with a high click-through rate.

Cons:

  • Expensive in competitive markets
  • You're paying for impressions, regardless of clicks. So less control.
Cost Per Thousand Viewable Impressions (vCPM)

The term vCPM (or viewable CPM) refers to the cost per thousand viewable impressions. It is a metric that represents how many people view ads on a web page rather than just how many people visit the website.

Pros:

  • Less risky investment than CPM.
  • Increased audience impact
  • It allows us to pay for the ads based on their viewability rather than just impressions.

Cons: 

  • Not all viewable impression has the same value. Emphasis needs to be placed on ad placements as well
  • Small audiences need to keep an eye on not to overwhelm by high frequency.
Cost-per-action (CPA)

Cost-per-action bidding is a lesser-chosen bidding option. For CPA, an advertiser pays the search engine only when their ad results in the desired action, such as a sale or sign-up.

Pros:

  • It saves you money, as you only have to pay if there's a sale or sign-up.
  • Tracking ROI is much more straightforward and efficient.
  • More cost-effective use of advertiser's budget

Cons:

  • Getting the desired actions (sales or sign-ups) can be tricky.
  • It can sometimes drive low-quality traffic.
  • CPA bidding can be more expensive compared to other bidding strategies.
Cost-per-engagement (CPE)

The least common bidding option is cost-per-engagement, where the advertiser pays the search engine every time ads are interacted with, such as getting clicked or viewed for a particular period.

Pros:

  • They can track ROI efficiently by seeing how much money they make for each engagement and fine-tune campaigns based on that.
  • Cost-effective use of advertiser's budget.
  • CPE bidding can drive high-quality traffic.

Cons:

  • Driving people to engage in your ads for a certain amount of time or with a certain level of attention might be difficult.
  • CPE bidding can become more expensive, as you have to pay for every engagement. 
Cost-Per-View Bidding (CPV)

The cost-per-view bidding strategy is for video ads. You set a campaign-level bid limit with Cost Per View (CPV), indicating the most you're willing to spend for each view or engagement with your video.

Pros:

  • CPV lets advertisers "bid up" to show ads alongside popular YouTube videos to bring a return.
  • CPV works well with highly focused video campaigns in a competitive market.

Cons:

  • You get a lot of views pretty cheap for campaigns where targeting is less compressed or loose. Implementing CPV is not going to do much there.
  • Not suitable for goals like brand awareness because you can't measure long-term correctly.
Target Impression Share Bidding

Target impression share bidding enables Google to automatically adjust bids to assist your advertisements in meeting the impression share goal you set for your campaigns. The term "Impression share" is defined as the formula: 

Impression share = impressions / total eligible impressions 

Pros:

  • If your ads must appear at the top, if not first, then this is the way to go.
  • Useful for campaigns with brand terms.
  • Suitable for raising brand awareness

Cons:

  • Quite expensive.
  • No conversion or click optimization is possible; only placing your ads on top is the goal.
  • No way to control the CPC and no bid adjustments.

Which Bidding Option Is Best Suited For An Advertiser Focused On Direct Response Marketing Goals?

When your marketing focuses on direct response, then the best bidding option for you is CPA (cost-per-action). 

You only pay when you see the desired action happen, which is perfect for direct response marketing goals.

CPA allows the most efficient use of a marketer's budget when the goal is a direct response.

Also, with direct response marketing goals, it's easier to track ROI on your SEM campaigns using a CPA strategy.  

Frequently Asked Questions

What are bidding strategies in Google Ads?

These strategies automatically set bids for your ads based on that ad's likelihood to achieve specific goals for your business.

What are the types of bidding strategies?

Cost-per-click (CPC), Enhanced Cost Per Click (ECPC), Cost Per Thousand Impressions (CPM), Cost Per Thousand Viewable Impressions (vCPM), Cost-per-action (CPA), Cost-per-engagement (CPE), Cost-Per-View Bidding (CPV), and Target Impression Share Bidding. 

What is the best bid strategy for display ads?

No one-for-all bidding strategies exist; you should choose a plan based on your goals and business needs. The best bid strategy for advertisers with direct response marketing goals would be cost-per-action (CPA).

Final Thoughts on Google Ads Bidding Strategies

When deciding on a bidding strategy, you must carefully consider your business's nature and core objectives.

Test and try different strategies if you have to until you decide on as best for your needs.

Take your time with bidding strategies; finding the desired performance and optimizations can often take some time.

Make data-driven decisions as much as possible, and when faced with bad performance issues, don't panic and analyze the results carefully.

Hopefully, this article leaves you with an understanding of different Google Ads bidding strategies for you to make informed decisions. 

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