Search engine marketing, much like love, is a battlefield. Before embarking on a project, you need to have a plan in place or you won’t stand a chance at being successful.
People are often confused by the different bidding strategies provided by their PPC platforms. The options can seem endless. There are several marketing strategies including cost-per-acquisition, cost-per-click, bidding position, and more. What is the best way to choose an overarching strategy for your campaigns?
Well, that depends on your goals.
This guide will help you improve your performance in SEM accounts. The ideas in the text can be used for Bing Ads or other PPC platforms, but Google’s options are more reliable, so I will focus on them. I am going to explain the advantages of the most common PPC bidding strategies, and which businesses should use them.
Conversion Strategies
These strategies get down to brass tacks. All changes made to your account are designed to increase conversions while staying within certain limits. The purpose is to have a flexible system that automatically places bids for keywords based on the likelihood that the keyword will lead to a conversion.
1. Search Page Location Strategy
If you want more conversions and your product lends itself to a high AOV, you can afford to spend more to acquire each customer. If your product has a high average order value, you can afford to spend more to acquire each customer, even if it means spending less per conversion. Strategies that target locations in the search results will spend whatever it takes to maintain a position in the search auction. This means that companies will continue to spend large amounts of money on advertising even if it is not profitable.
You can set your search bids once and not have to worry about them again. Your management platform will change bids throughout the day to ensure that your budget limit is reached. However convenient this strategy may be, it has the potential of significantly increasing your costs and reducing the profitability of your campaigns. The costs-per-click in search auctions are always changing, depending on things like the type of device being used, the time of day, and how many other people are participating in the auction.
You should only implement a target search page location strategy when you are willing to spend money that might not have a direct return on investment. If you don’t want to be stressed, you should change your strategy.
When to Use It:
Search page location strategies are beneficial when you have money to spend. The problem is that profitability might shrink or even disappear. Visibility and recognition are the primary goals of this strategy. You can avoid headaches by holding these kinds of campaigns to a higher standard than the rest of your account.
Use metrics like impression share and assisted conversions to gauge the success of your ad campaigns, rather than relying solely on direct conversions and ROI. The goal is to increase your visibility and influence conversions in the future, so take a step back and think about the long term.
2. ROAS Strategy
ROAS bidding strategies set a target return on investment for your ad spend. The goal is to generate a specific amount of revenue based on your advertising budget. You establish a target return-on-investment (ROI) figure by dividing the desired amount of revenue by the cost of achieving it. PPC bidding platforms follow the traditional ROAS formula:
ROAS = (Revenue)/(Cost)
PPC management platforms typically aim to generate a specific ROAS (return on investment) from the money you spend on your campaigns. Your tool will average out the costs of individual conversion values to meet the ROAS you set. You ROAS for your campaigns to make sure you’re not overspending in areas where you can afford to spend more. Marketers often discover that conversions with low ROAS (return on ad spend) are dragging down conversions with high ROAS when they are bundled in the same campaign. It is beneficial to place campaigns or ad groups with comparable ROAS aims together.
When to Use It:
If you spend five dollars for every conversion generated by your website, you will quickly run out of money. This means that for every successful sale that you make, you will earn twenty-five dollars. If you generate five sales, then your ROAS formula will look like:
($125)/(25) = 500% ROAS
If your product or service is worth varying amounts, this type of bidding strategy is a great way to go. You’ll then take that average and compare it to your ad spend. An ROAS strategy will average the revenue you generate across all of your products and compare it to your ad spend. Combine products that should produce similar ROAS values and allow your PPC software to do its job.
3. Manual Cost Per Click
- Set your maximum cost per click.
- Often CPC is much lower than your maximum.
- Easy to change and manage.
- Can overpay or underpay if not researched properly.
If you have carefully researched your keywords and know which ones are most effective, you can choose to set your cost per click manually. You can manage your bid prices across multiple campaigns by setting your maximum cost per click (CPC). As long as you stick to your bid price per click, you will never pay more than that.
The downside to this bidding strategy is that if you’re not confident in the PPC bid price, you could either end up paying too much for your chosen keyword, or too little and not getting many clicks.
You may not need to bother with manual cost per click (CPC) if some schools of thought are to be believed. The thinking goes that automated CPC options are now much improved and more effective than in the past. This isn’t the best option for beginners, but it’s the most basic option and can come in useful for specific or secondary keywords.
4. Automatic Cost Per Click
- Google finds best CPC based on your daily budget.
- No need to set maximum CPC.
- Not ideal for low volume keywords.
This PPC strategy is easy to manage and lets Google do the work. Google’s algorithms are designed to get you the best bids for your chosen keywords based on your daily budget. This means that you can set up your ideal cost per click and let the campaign run without having to worry about it.
If you fully automate your Google Ads, you may end up paying more per click than necessary. Your maximum CPC can be easily exceeded. Thing like when lots of people want the same keyword or when another company is willing to pay a lot for a keyword can make your own price for the keyword go up.
If your search terms are not specific or are not used often, automatic cost per click might not be the best PPC strategy for you. If you use generic search keywords, you might attract accidental clicks, or show up incorrectly in search results.
5. Enhanced Cost per Click (ECPC)
- Allows you to set your maximum CPC.
- Can exceed your maximum CPC for best chance of conversions.
- Uses smart bidding technology to find the auctions most likely to convert.
If you’re using manual CPC, this bidding strategy can help you get better results. The theory is that if you use an enhanced cost per click, your bid will be adjusted for the best chance of getting a conversion, even if this means exceeding your maximum CPC. This means that you can also try to bid low for certain keywords.
ECPC adjusts your bid based on your conversion history and Google’s analysis in order to get the best results. To be eligible for this, you must have been running a CPC bidding strategy for the last 30 days and have had at least 15 conversions during that time. ECPC will bid on searches based on an analysis of when, where, and among which demographic groups they are being made.
If you set a maximum CPC price, ECPC will bid up to that amount if it thinks it will help convert a customer. The bid cap was 30% previously, but ECPC can now go over that. Although, it will try and keep the average CPC at or below the specified amount.
6. Cost per Acquisition (CPA)
- Set your average target price for individual acquisitions.
- Google will try and get as many conversions as possible at target CPA.
- Target conversions by device: choose to focus on mobile or desktop as you wish.
- Works well on high volume searches and large ad campaigns.
The bidding strategy is similar to ECPC, allowing you to set a target price for acquisitions, and uses smart bidding for the best chances of success. Your target CPA is more of a guideline, and it’s okay if it’s exceeded regularly. Google tries to keep the target cost close to your ideal CPA.
If you have a lot of experience with running CPC campaigns and you know what usually results in a conversion, then using target CPA can help you manage your budget more efficiently. This allows you to target particular devices in order to get the best results, which is especially useful if you find that most conversions come from mobile devices or tablets. Advertisers with large budgets and multiple keywords will find this method effective, while small businesses targeting specific keywords may not.
7. Cost per Mile (CPM)
- Pay per 1000 (one thousand) views of your ad.
- No pay per click.
- Possible to get lots of views but no clicks throughs to your site.
The CPM bidding strategy means that you will only have to pay for the amount of times that your ad is seen on websites that are part of the Google Display Network. This is more appealing for those running a brand awareness campaign than for those looking to get more sales or leads.
You will pay your specified cost per one thousand impressions for each ad that is viewed one thousand times. You will not pay anything for any clicks on the ad. If you are only getting people to click through to your site and not converting them, then you are essentially paying for all these views with no conversions.
If your current display ad is converting well, you may want to consider using a CPM strategy instead of CPC. CPM may be more cost effective for you.
8. Maximise Clicks
- Automated bid strategy designed to get the most clicks for your budget.
- Set a target budget and Google will find the best CPC.
- Optional bid limits to stop you going over budget (not recommended by Google).
The difference between this bidding strategy and ECPC is clear. The “maximize clicks” setting on your Google Ads account ensures that you get the most value for your money by receiving the most clicks possible within your daily budget. You set the maximum amount you’re willing to pay per click with ECPC. So your daily budget can fluctuate depending on how many clicks you get.
If you set a target spend for your campaigns or keywords, Google will use that information to determine how much you spend. If your campaign has been doing well in terms of conversions, it is best to use this particular bid strategy. CPM also works well if you’re trying to get people to take action. Investing in website traffic can be an effective way to increase your site’s visibility, but the quality of that traffic may be variable.
Google advises against setting bid limits as this can negatively impact the strategy’s effectiveness.
9. Outranking Share Strategies
Sometimes the goal is to outperform an opponent. An outranking share strategy is one way to outrank a competitor and get more clicks on average. This strategy will help ensure that your ads are displayed more often than a competitor’s in search results.
Outranking share strategies generally involve three components:
- The competitor’s domain: It is important to remember that this strategy focuses on outperforming a single, specific competitor. Most PPC platforms will not let you enter a batch of domains you want to beat in the auctions. Position yourself against the domain that makes the most sense financially and from a branding standpoint.
- Target outranking share: The percentage of auctions that you aim to dominate. Mastering this part requires you to take a hard look at why you are pursuing this strategy and the target domain. Can you afford to outrank them in the vast majority of auctions? If you can afford to, should you? Run your numbers to see what share of auctions you are comfortable pursuing.
- Max bid limits: Much like the position bidding strategies, outranking a specific domain can become incredibly expensive quickly. Many advertisers make the mistake of underestimating a competitor’s advertising budget and reach, and wind up biting off more than they can chew. Platforms like AdWords will set your max bid limits for you if you would rather not work through the math, but be sure to keep an eye on your costs over time.
When to Use It:
Outranking your competition by sharing strategies can be incredibly effective when you roll it into a larger strategy. Positioning is the name of the game here. The main advantage of this strategy is that it allows you to associate your brand with that of your competitors. Your ad is more likely to be seen by potential customers than your competitors, which builds trust. This is an opportunity to advertise the differences between your brands in a way that will help you achieve your business goals. This strategy is commonly used by small brands who are competing against bigger brands and has had great success.
To convince a searcher that what you offer is a better choice than your competitor, you will need to create a compelling offer that speaks to the searcher’s needs. The key is to write stellar ad copy. To outrank your competition, you need more than just a higher ranking – you need ads that are more appealing than theirs. It is important to remember that conversion rates are not the only metric to use when measuring the success of your strategy. It can be difficult to measure your success when it comes to branding strategies, because they are often nebulous in nature.
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