Google Ads Bid Strategies to Boost Profit Margins

May 15, 2024

Google Ads remains a powerful tool for brands to increase visibility and drive targeted traffic to their websites in 2024. At the heart of success on this platform is understanding bidding strategies, which determine how, when, and where your ads are displayed. 

Choosing the right Google Ads bid strategy isn’t a one-size-fits-all task. It needs a firm understanding of how Google Ads works, a clear idea of what your business wants to achieve, and the know-how to make these two things work well together.

This article aims to give brands an understanding of the nuances of each Google Ads bidding strategy and how to apply them in a way that aligns with financial objectives, turning clicks into profits.

Manual CPC

Manual CPC (Cost-Per-Click) is the old-school approach to Google Ad bids. Advertisers set bids at a granular level, deciding exactly how much they’re willing to pay for a click on each keyword. 

This strategy offers lots of control, allowing advertisers to specify a maximum bid—say, ten cents per click for a specific keyword—ensuring they never pay more than their set budget for a click on that keyword.

However, the granularity and manual control that makes Manual CPC appealing to some is also what’s making it less popular for larger brands. Managing bids manually across a large account with numerous keywords or product groups can quickly become overwhelming. 

And in the age of AI and machine learning, Manual CPC simply cannot compete with Google’s smart bidding strategies. These automated strategies can outperform manual adjustments, especially in complex, fast-changing auction environments where it’s not humanly possible to adjust bids 24/7.

Enhanced CPC

Enhanced CPC (ECPC) is a sophisticated Google Ads bidding strategy that serves as an intermediary between the granular control of Manual CPC and the full automation of Google’s smart bidding options. By leveraging conversion tracking and machine learning, ECPC aims to optimize your bids for conversions, adjusting your manually set bids in real time based on the likelihood of a conversion occurring. 

ECPC is particularly useful for advertisers who are transitioning from Manual CPC to the predictive power of Google’s machine-learning capabilities. It’s only suited for campaigns where conversion tracking is in place, allowing Google’s algorithms to predict and pursue auction opportunities that are more likely to lead to conversions.

For instance, if an advertiser sets a bid of ten cents for a keyword, ECPC can adjust this bid higher, more than twice as much in some instances, if it predicts a high chance of conversion from a particular auction. This flexibility makes ECPC an attractive option for those looking to maximize the efficiency of their ad spend while still maintaining a degree of bid control. 

Even though it’s an enhanced automation strategy, it’s’ not fully automated like the rest of the strategies we’ll discuss on this list. As brands become more comfortable leaning on AI and machine learning, ECPC is losing popularity in favor of fully automated strategies. 

Maximize Clicks

The “Maximize Clicks” bidding strategy in Google Ads is a fully automated approach designed to do exactly what its name suggests: maximize the number of clicks your ads receive within your specified budget.

This strategy is especially useful for campaigns where the primary goal is to drive as much traffic as possible to a website rather than focusing on conversions or impressions. It’s an approach that optimizes for the lowest CPC, allowing advertisers to gather a significant volume of visits with their allocated budget.

Maximize Clicks is also helpful in situations where website conversion tracking is not available or if the campaign doesn’t have specific conversion actions to measure. It focuses purely on driving traffic, assuming that the higher the number of visitors, the greater the potential for achieving the campaign’s broader goals, such as increasing visibility or supporting off-platform sales.

However, this strategy can lead to traffic without conversions, as the focus is on the quantity rather than the quality of clicks. Brands prioritizing conversions, high-quality leads, or specific ROI metrics might find this approach less effective compared to more conversion-centered bidding strategies.

Maximize Clicks is a fundamental, though somewhat elementary, bidding strategy available to Google Ads users.

Target Impression Share

Unlike the strategies that focus directly on clicks or conversions, Target Impression Share is about ensuring your ads appear a certain percentage of the time they are eligible to show for a specific keyword or set of keywords.

This automated bidding strategy is particularly suited for brands aiming to maximize their presence in search results or on specific websites. It can ensure that their ads are seen by as much of their target audience as possible.

For instance, if you’re running campaigns on your core brand terms and achieving excellent results—high Quality Score, great ad strength, and a superior return on ad spend (ROAS)—you might want to lock in that success by maximizing how often your ads are shown. Target Impression Share allows you to set a goal for how often your ad appears in eligible placements, helping to sustain or enhance brand dominance in SERPs.

If a brand consistently performs well on searches for its own name or for specific high-value products, aiming for a high impression share, like 95% or even up to 99%, will allow that brand to ensure that its ads are prominently displayed and minimize the chances for competitors to poach potential customers.

While targeting a high impression share can be beneficial for brand visibility, the closer you aim for a 100% impression share, the more expensive the endeavor becomes—sometimes disproportionately so. Chasing that last 1% can lead to significantly higher costs, often without a corresponding increase in value or ROI. 

Target Impression Share depends heavily on the competitive landscape. If few competitors are bidding on your targeted keywords, achieving a high impression share might be relatively easy and cost-effective. However, in highly competitive markets, the cost can escalate quickly.

Maximize Conversions

Maximize Conversions is a smart bidding strategy within Google Ads designed to amplify the number of conversions you achieve within a given budget. This strategy dynamically adjusts bids to capture the most conversion opportunities at the lowest possible cost.

It is particularly advantageous for campaigns with a clear and measurable conversion goal, such as form submissions, product purchases, or sign-ups. It’s an excellent starting point for new campaigns, allowing Google’s algorithms to quickly learn and adapt bids based on conversion performance.

Max Conversions is ideal when the main objective is to boost the volume of conversions, regardless of their individual value. It’s especially useful in scenarios where gaining market share or increasing user base size is more critical than the immediate return on each conversion.

However, Max Conversions isn’t suitable for all campaigns, particularly those where the value of conversions varies significantly. Since this strategy treats all conversions equally, it may not discern between a high-value conversion and a lower-value one.

Additionally, campaigns with very specific cost-per-acquisition (CPA) targets may find the approach of Max Conversions challenging if not paired with a well-calibrated budget. The strategy’s aggressive pursuit of conversions can lead to spending the entirety of the daily budget in search of conversion opportunities, which may inflate the overall CPA if not monitored and adjusted appropriately.

Starting a campaign with Max Conversions and a judiciously set daily budget can lay a solid foundation for scaling and refining the campaign based on its CPA performance over time.

Target CPA

Unlike the broader approach of Max Conversions, Target CPA focuses on achieving a specific CPA, allowing advertisers to fine-tune their campaigns for optimal performance against predetermined cost objectives.

At its core, Target CPA allows advertisers to set a goal for the average amount they’re willing to pay for a conversion, trusting Google’s algorithms to adjust bids automatically to meet this target. It represents a more advanced application of Google’s smart bidding technology, where the system dynamically manages bid levels to align with the advertiser’s CPA goals.

It’s well-suited for scenarios where advertisers have already established a baseline CPA through initial campaigns (such as Max Conversions) and are looking to optimize further based on those insights.

However, Target CPA may not be the best fit in every scenario. Campaigns lacking sufficient conversion data may struggle to set realistic CPA targets initially—too low or too high—leading to either constrained campaign reach or inefficient budget use. 

Successful use of Target CPA involves continuous monitoring and adjustments based on performance data. Advertisers might find opportunities to refine their CPA targets, making granular adjustments at the ad group level or varying bids based on audience segments, geographic locations, or times of day to maximize efficiency.

Max Conversion Value and Target ROAS

Max Conversion Value and Target ROAS represent advanced tactics designed to fine-tune campaigns for maximum profitability. These strategies shift the focus from accruing conversions to enhancing the value of each conversion.

Max Conversion Value aims to maximize the total value generated from conversions within your set budget, prioritizing actions that bring in higher revenue rather than more conversions. It requires a nuanced understanding of the value each conversion brings to your business, whether it’s a direct sale, an add-to-cart action, or a filled-out lead form.

Target ROAS, on the other hand, sets a benchmark for the return you expect from each dollar spent on ads. It adjusts bids to achieve an average return that meets or exceeds this target, making it an invaluable strategy for campaigns where ROI is a primary concern.

While Max Conversion Value focuses on maximizing the total value of conversions, Target ROAS ensures that the value of these conversions aligns with specific profitability goals. 

For instance, an advertiser might utilize Max Conversion Value to prioritize high-ticket items or services. As they gather data on the value these conversions bring, they could then implement Target ROAS to fine-tune their bidding strategy, ensuring that ad spend is proportional to the actual return in revenue.

High-value items, long sales cycles, or products that benefit from direct customer engagement before a purchase are prime candidates for these approaches. By assigning appropriate values to different conversion actions—like setting a static value for add-to-carts based on their likelihood to convert to sales—businesses can more accurately optimize for revenue.

However, employing Max Conversion Value and Target ROAS requires a sophisticated understanding of your conversion funnel and the ability to accurately track and value different conversion actions. Businesses that cannot track conversions effectively or have a uniform value for all conversions may struggle to leverage these strategies effectively.

Max Conversion Value and Target ROAS represent the pinnacle of strategic advertising on Google Ads, offering businesses the tools to not just chase conversions but to do so in a manner that directly supports their revenue and profitability goals. 

Fine-Tuning Your Bidding Mix

Brands should plan on a strategic progression from initial broad strategies like Max Conversions to more nuanced approaches such as Target CPA and eventually to Target ROAS, as they gain deeper insights into their performance metrics and position in the market.

Beginning with Max Conversions allows brands to gather essential data and maximize conversion volume within budget constraints, serving as a foundation for initial insight gathering. 

As brands delve deeper into their campaign analytics, transitioning to Target CPA offers greater efficiency, focusing on securing conversions at a cost that meets the brand’s financial goals.

The ultimate move towards Target ROAS further sharpens this focus, optimizing not just for the efficiency of conversions but also their direct revenue contribution. This strategic evolution is guided by a continuous analysis of conversion data, market conditions, and business goals.

However, don’t silo yourself into only one strategy. Tailoring approaches based on product categories, profit margins, and customer lifetime value allows for a more dynamic and responsive advertising strategy. 

For instance, high-value products may benefit from a Target ROAS strategy to directly correlate advertising spend with revenue generation, while broader awareness campaigns for lower-margin items might utilize Max Clicks to drive traffic. 

The key lies in continuously adapting and evolving strategies based on financial insights, market trends, and campaign performance to maintain a competitive edge.

Successfully navigating Google Ads’ complex array of bidding strategies requires a deep understanding of each option’s nuances and how they can be best applied to meet a brand’s specific goals. By carefully selecting and adjusting these strategies over time, brands can ensure that their advertising efforts are not just effective but also efficient, contributing positively to the bottom line.

About the Author: Shawn Assad is the Strategy Lead, Search, Shopping, Display, and Video at adQuadrant. He is a former US Marine who earned his B.A in Psychology from California State University, Northridge followed by an M.B.A. from Pepperdine University. Shawn has been working in digital marketing for 9 years with a passion for data and cats.

More Articles