Screen Shot 2015-07-01 at 10.18.30 AMSearch marketers are all familiar with the method of cost-per-click bidding to indicate the most they’re willing to pay for a click in the auction, but may not be familiar with the nuances of other bidding strategies and terms. Aligning your bid strategy with your campaign goals is critical to maximizing performance within your exposure, conversion, and/or budgeting constraints.

By default, most marketers use manual bidding for maximum CPC targets, but there are many more search bidding methods in the auction.

Let’s start by defining the most common types of search bidding methods and then some of the most advanced methods of using bidding:

  • Cost-per-click (CPC) — known as the ‘default’ bidding method, marketers set a maximum amount they’re willing to pay each time their ad is clicked
    • Best for: new advertisers getting familiar with paid search or those with little to no conversion data
  • Cost-per-acquisition (CPA) — beyond clicks, CPA tells Google how much you’re willing to spend on a conversion (sale, download, action, etc.). Even though you still pay per click — the algorithm tries to maximize conversion volume.
    • Best for: lead generation or products/services with a fixed cost model where an ROI calculation can be used.
  • Return on ad spend (ROAS) — focused on revenue per ad dollar spent, which can help account for different priced products or services and better illustrates how paid search affects business revenue.
    • Best for: eCommerce or products/services with variable revenue

In addition to the common strategies, more advanced settings include:

  • Automated CPC — the simplest of the bidding strategies, automated CPC allows Google to determine bids in order to maximize the number of clicks for a given budget. This means that marketers can save the time otherwise spent setting individual bids for keywords, ad groups, or placements.
    • Best for: new advertisers or marketers strapped for time
  • Enhanced CPC — leverages past conversion data to make automatic bid adjustments (increasing max CPC up to 30%) for clicks that the algorithm determines is more likely to result in a conversion.
    • Best for: marketers looking to evolve their strategy beyond clicks and begin optimizing around conversion data
  • Conversion Optimizer — Google’s Conversion Optimizer (CO) is a proprietary ‘learning’ algorithm which collects data on past conversions to inform and use predictive bidding for future searches. Just 15 conversions in the last 30 days is required in order to opt-in to use CO. One caveat of using CO is that all factors that enter into the bid calculation, including mobile bid adjustments, day parting, etc. are overridden by the algorithm.
    • Maximum CPA — as the name implies, the maximum CPA sets a ceiling at which the search engine will not bid over. This means that even if the search engine predicts it can convert a searcher at a $55 CPA, if the max CPA is set to $50, it will not bid higher.
      • Best for: marketers that have tight controls over profitability and how much an acquisition can cost.
    • Target CPA — average amount willing to be paid for each conversion, meaning that while individual conversions might cost more or less — the aggregate should near the Target CPA.
      • Best for: marketers who are comfortable giving the CO additional flexibility in delivering ads, even if it’s slightly higher than the target CPA.

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  • Mobile bid adjustment — allows for changes in bids specifically for mobile devices. The adjustment can range from -100% (excludes mobile searches) to 300% of the original bid. ex. for a bid of $1, a 300% bid adjustment would be $4.
    • Best for: ensuring ads are shown in prime positions for mobile searches (accounting for the fact fewer ads are shown on phones).
  • Location bid adjustments — create different bidding targets within geographic areas
    • Best for: marketers who can identify pockets of performance within a geographic region. For example, if a campaign targets all of the US, but California and New York are the best performing markets, bids can be adjusted specifically for those states to boost sales.
  • Flexible bidding strategies — these strategies includes many of those listed above with the addition of “target search page location” and “target outranking share”. Once created, these bidding strategies are saved in your AdWords account under “Shared Library → Bid Strategies”
    • Best for: more complex accounts where strategies might vary across or within campaigns at the campaign, ad group, or even the keyword-level

As search marketers become more familiar with the various bidding methods, their strategy should evolve beyond cost-per-click bidding to include the more advanced settings that better align with campaign goals and budgets.

Note: While Bing/Yahoo does have a conversion pixel to indicate when a conversion has occurred, the current platform does not use the conversion data to inform real-time bidding. As such, any mention of using conversion data for bidding is in reference to Google’s capabilities.