Google AdWords offers a number of ways to approach your cost per click bidding. They basically range from manual and somewhat automated over to completely automated bidding.
Here’s how you can set your bid strategy:
Click on a campaign -> Settings -> Bid Strategy -> Edit -> Change Bid Strategy
Default Option: “Manual CPC”
If you haven’t changed your bid strategy, the default option is “Manual CPC”.
In my experience, this is the best option for experienced marketers. If you spend enough time monitoring and adjusting your CPC bids, this strategy allows you to fine-tune your strategy like no other option.
Option: “Target search page location”
This option allows you to ensure that your ads are either always in top positions or at least on the first page of the search results. This is only useful if you are targeting brand keywords or are running a branding campaign where visibility (but not ROI) is important.
Option: “Target CPA”
The option “Target CPA” uses the AdWords Conversion Optimizer tool to automatically adjust your CPC bids based on a target cost per acquisition. This option requires that you have conversion tracking installed and that your campaign has generated at least 15 conversions in the last 30 days.
The Conversion Optimizer algorithm is using past conversion data to optimize your CPC bids. Therefore the more conversion data you have the better it will work.
I’ve tested the feature a number of times and I’ve never been able to generate better results than by using manual bidding or enhanced CPC. Keep in mind that you are handing over your bid management to Google and it’s not necessarily in Google’s best interest to generate the lowest possible cost per acquisition for you.
That said, if you don’t have the time to monitor and adjust your bids manually Conversion Optimizer can still be a good option for you.
Option: “Target ROAS”
This option works in the same way as “Target CPA”. However, in this case you are able to target a specific return on ad spend. In addition to conversion tracking this option requires that you pass on the value of each conversion (i.e. transaction).
Compared to “Target CPA” this strategy is actually more sophisticated since it takes the conversion value into account. There might be certain keywords in your campaign that tend to generate sales with a higher value. In these instances the you could allow for a higher cost per acquisition while maintaining a specific return on ad spend.
In the end the same recommendation as for “Target CPA” are true here. In my experience “Manual CPC” will generate the best results if you put in the time and effort. If you have to choose between “Target CPA” and “Target ROAS” I would recommend the latter.
Option “Target outranking share”
The option “Target outranking share” allows you outrank a specific competitor domain. You can use “Auction Insights” to check which competitor domains are bidding on the same keywords as you.
For example, if you notice that competitors are trying to bid on your brand keywords you could use this option to ensure that you outrank them 80%, 90% or 100% of the time. Keep in mind that AdWords will automatically adjust your bids based on your target percentage. If you define a high outrank percentage this could become very costly (depending on the keywords).
Option: “Maximize Clicks”
I never use this strategy since it’s focussed on maximizing clicks, not maximizing ROI. It basically encourages Google to focus on generating as many clicks as possible irrespective of click quality.
I can only think of two scenarios where this bid strategy might prove useful. The first one is if you are running a campaign that only targets your brand keywords and you want to maximize brand clicks. The second one is if you are a publishing business and you only care about generating clicks for your content (in order to increase ad impressions on your website).
Option: “Enable Enhanced CPC”
In some cases the setting “Enhanced CPC” can work well. The setting allows Adwords to automatically increase your bids by up to 30% if they are expected to be likely to generate a conversion. It can also lower your bids by up to 100% if clicks are deemed less likely to convert.