21 AdWords Bidding Strategies Your Competitors Don’t Know (Part 1/2)

Does winning every AdWords auction make you as happy as the kid above wearing a sweet fedora with $36 to spare?

How about watching your ads pull in double-digit conversions, catapult themselves the top of the page … while at the same time undercutting the suggested cost-per-click every other chump is still forced to bow to?

You know, a little something like this:

This cat just won the AdWords library. - image source

Of course, beating your competitors in the AdWords slug match that happens 40,000 times every second isn’t easy … nor does it happen by accident.

Even if you’ve never had a AdWords breakthrough and known the joy of virtually destroying your deep-pocket rivals, I’ve got good news.

All it comes down to is arming yourself with the right tricks, tools and tactics — 21 to be exact — and then releasing the Kraken.

Let’s jump in…

The AdWords Auction

The art of bidding has been around since 500 B.C., where women of Babylon were being auctioned off as wives.

And while we’ve improved women’s rights since then, the art of the auction is more unfair than ever.

Just take a look at this AdWords auction from the 1940s.

Don’t be fooled. People were smiling, but it was fierce – image source

Joking aside, PPC management companies these days easily have hundreds of different bidding options that can be performed automatically (within milliseconds too), so it’s vital that you know what’s out there to take advantage of.

Like I mentioned earlier, the AdWords auction happens extremely fast (and extremely often). It takes three major things into account when it decides how your ad should rank:

     1) Your max cost-per-click bid for the keyword

     2) Your quality score for that keyword

     3) Your ad extensions and their relevance to ad and keyword

If you’re trying to set yourself up for the ultimate level of AdWords success, then I highly recommend you read my post on Single Keyword Ad Groups (SKAGs), that has gotten almost over 200 comments so far.

In that post, I talk about the reason why you should care about granularity of an AdWords account and how it’ll give you even more of a positive bump for your AdWords bidding strategies.

Let’s dive in.

What Are Your Goals?

The auction based model of AdWords bidding got its name from the Latin word “augeō” which means “to increase”.

But “to increase” means to pay more. We don’t want to do that.

We want to make more profit.

But that’s just my goal. What’s yours?

See, when it comes to bidding and average cost per conversions, you’ll always want to keep conversion volume and cost per conversion balances in mind.

You can keep lowering bids, but that will eventually hurt your conversion volume.

You can keep increasing bids (which might help increase your conversion volume), but that will eventually increase your cost per conversion.

The good thing?

You can have the best of both worlds (not the Hannah Montana song).

The Different AdWords Bidding Strategies

Whether you want to do things manually or automate, the AdWords bidding strategies we’re about to uncover can help you get closer and closer to your goals.

One thing to keep in mind however, is that nothing should ever be set on auto-pilot.

Always keep tabs on fluctuations, and if you improve your conversion rates through landing page testing, then understand that your bidding goals can quickly improve and change (higher conversion rates can allow you to have more aggressive bidding strategies).

Here’s a look at the different AdWords bidding strategies available today:

Manual Cost Per Click (CPC) 

Manual cost per click allows you to set bids at either the ad group or keyword level.

If you set individual bids at the keyword level, then this will allow for the highest level of control. Ad group level manual bids would give the same bid to all the keywords or placements within that ad group.

Important Note: Keyword level bids override ad group level bids.

 Here’s a look at what that looks like.

This is usually always the best bidding strategy for brand new advertisers who want to make sure that nothing is overspending and that the control is tight.

Automatic Cost Per Click (CPC)

Automatic cost per click gives Google control to adjust your bids (up or down) to help give you the most clicks within your daily budget for that specific campaign.

This is usually a decent bid strategy to use if you find yourself having to drastically reduce budgets (for one reason or the other), where you don’t want to lose impression share too fast.

Take a peek at what that will look like.

One of the downsides to this bidding strategy is that it doesn’t allow you to set max CPC bids at the individual keyword levels.

Some keywords may be performing better where you want to increase bids, and others are performing worse. If you use automated bidding, then you won’t be able to have that level of control.

Another important thing to keep in mind is that your goal isn’t to get clicks, it’s to get conversions. So you can test this AdWords bidding strategy, but it may not work out for you.

Enhanced Cost Per Click (CPC)  

Enhanced CPC (ECPC) gives Google the freedom to increase or decrease your bids by 30%.

Google tells us that they use historical conversion data and their algorithms to predict which searchers are more likely to lead to a conversion and which aren’t.

In the event that a conversion is likely to happen, Google will increase your max CPC bid by up to 30%, and do the opposite for conversions that are least likely to happen.

Google says that “ECPC can help you get more conversions while maintaining or reducing your cost per conversion.”

But take that with a grain of salt.

If you’re curious then, try it on a smaller campaign first and measure the cost per conversion, conversion rate, and conversion volume as an apples to apples comparison.

Simple as that.

Sometimes this is a default bid setting when creating new campaigns, so be aware if you don’t want to use it at that given time.

CPA Bidding (Conversion Optimizer)

Also known as conversion optimizer, CPA bidding allows Google to adjust bids to average a certain cost per conversion goal that you’ve set.

Based on the history of your AdWords account and conversion volumes, CPA bidding needs at least 15 conversions over a span of 30 days to become active.

If you meet that criteria, the CPA bidding can only be held back by budget caps that you might have.

Many times, I’ve found that CPA bidding is much more effective on the AdWords Display Network (where there a lot more factors are responsible) vs the AdWords Search Network where keyword intent can be very obvious that it could lead to a conversion.

As with all AdWords bidding strategies, always record pre-performance and compare it with post-performance after you implemented a new bidding strategy.

So, there you go.

CPM Bidding (Cost Per Thousand Impression)

Only available for Display network campaigns (like remarketing), CPM bidding allows you to set target bids that accumulate after 1,000 impressions.

Google once allowed max CPM bidding, but has since changed it to what’s called Viewable Cost Per Thousand Impression bidding (vCPM).

CPM bidding doesn’t charge you for clicks, but it will charge you for impressions of your ads even if they’re shown below the fold (where a user never sees them).

Here’s what that bidding strategy option looks like within a Display network only campaign:

Here’s what that will look like.

Flexible Bid Strategies

Your flexible bid strategies are located within your AdWords shared library.

Once you get there, you’ll find the option to choose from six different flexible bid strategies. Here’s a look at each one:

Voila!

Enhanced CPC: Something we already covered earlier with the option to raise or lower bids by 30%.

Target search page location: If you found that your ads perform really well above organic search results or maybe on the sidebar, then this bid strategy will be fun for you to test out.

Here’s a look at the options you can set:

Options are always good.

Target CPA: With target CPA bidding you can include as many or as few campaigns as you want to share the same CPA goals. Similar to what regular AdWords shared budgets do.

Target outranking share: Are you basing all your performance goals on how much you can outrank a certain competitor (strokes the ego, but can be dangerous)? Then this bidding strategy could help you out quite a bit.

By entering your competitor’s domain, you can tell Google how often you want to bid to outrank them, this is called the “Target outranking share”.

Pretty cool, right?

If you set your target outranking share to 50%, then Google will bid to outrank that specific competitor in 50% of the auctions.

Maximize clicks: This automated bid strategy is just like the automated CPC bidding.

Be aware that this could lead to a lower quality of clicks which could lead to lower quality conversions.

Target return on ad spend: Do you have a certain ROI you want to hit when it comes to your PPC agency spend?

Target return on ad spend (ROAS) is a percentage you can set so that your conversion values (something you set at the conversion tracking stage) or Google Analytics ecommerce revenue values, are taken into account.

Let’s say you’d like a 7x ROI, then you’d set your target ROAS as 700%, as eBags did and succeeded with in this Google case study.

This means that for every $1 you spend on clicks, you’re expecting $7 in return.

To learn more about the pros and cons of each bid option, check out this post we wrote on the exact topic of flexible bid strategies.

Stay tuned for discussion in bid modifiers in part 2 of this post.