The way you bid on keywords can make or break your Google Ads campaign. Even if you have a compelling ad, you could be paying a much higher cost than needed by choosing the wrong keywords. Implementing the right keyword bidding strategy can significantly lower the cost to acquire a customer. We’re going to show you nine tips that will improve your Google Ads keyword bidding strategy. This will reduce wasted ad spending.
Before we jump into which bidding strategy is best for you, it’s essential to know that there are two forms of keyword bidding, manual and automatic. Manual bidding is the best way to understand how your ads are performing. You can set bids for either ad groups or specific keywords. We recommend using Google’s Keyword Planner tool to research and select keywords for your ads. Enter keywords that are relevant to your product or service, and it will suggest a reasonable starting bid.
Automatic bidding, on the other hand, is more effective when you have a lot of data from previous campaigns. The more data that you can give Google Ads, the better it can predict the outcomes of future bids for your campaign. Unless you can provide this data, we highly recommend you start with manual bidding. It is more effective, to begin with, numbers that you can see, respond, and adjust. Here are nine tips that you can use to improve your Google Ads bidding strategy.
1. Target Cost Per Acquisition (CPA) – Keywords with a Lower Cost Per Acquisition Will Save You Money
Choosing the right keywords is one of the most critical steps in having a profitable keyword bidding strategy. Cost Per Acquisition (CPA) is a smart bidding strategy that advertisers use to increase conversions while targeting a specific action on their website. A keyword with a lower cost per click doesn’t necessarily mean it is better than a keyword with a higher cost per click.
More traffic at a lower cost per click doesn’t always mean more profit for your business. For example, say you own a company that sells custom wine glasses. You target the keyword “wine” and receive 1500 visitors a day at $1.60 per click. You also target a more specific keyword “wine glasses” and acquire 300 visitors a day at $2.00 per click.
“Wine glasses” is a more specific keyword to your business and converts into sales at a rate of 15%. The keyword “wine” only converts into sales at a rate of 5% because you don’t sell wine on your website, just wine glasses. Although “wine” is generating 75 sales and “wine glasses” is generating 45 sales, the cost per acquisition is different.
“Wine”: $2400 / 75 sales = $32 per customer aquisition
“Wine Glasses”: $600 / 45 sales = $13.33 per customer aquisition
The keyword “Wine Glasses” costs you less per customer even though it has a higher price per click than the keyword “Wine”. In this example, the company should use more money, targeting the keyword “Wine Glasses”.
By utilizing Google Ads’ CPA bidding, you can target keywords that convert well for your business. You can find which keywords convert the best for you by running ads for different keywords for a short period. You should then go back and remove keywords from your campaign that aren’t converting effectively. This can save you a lot of money over time and increase your sales.
2. Target Return on Ad Spend (ROAS) – The Best Indicator for High-Value Products’ Success
Return on Ad Spend or ROAS is another bidding strategy that will help you reach your target return on investment. With a ROAS bidding strategy, you are targeting a specific dollar amount from sales instead of the actual number of sales. This method is particularly useful for higher-value products because sales volume isn’t the best indicator of the product’s success.
ROAS is a simple calculation that looks at your returns from what you spent on ads to what you made in conversions. It’s important to note that this calculation doesn’t take your companies profit margins into account. You can calculate your ROAS by using the formula below:
ROAS = Total Revenue / Cost of Ads
Target ROAS is an automated bidding strategy on Google Ads that will adjust your bids based on your end goal. Google Ads uses your past conversion data to predict future conversion opportunities and their return. Google Ads will set a max cost per click bid to target the average ROAS you specified.
3. Target Search Page Location – You Will Increase Brand Awareness
Choosing to target a search page location with your Google Ads is an effective way to increase your company’s brand awareness. This Google Ads keyword bidding strategy automatically bids on keywords to show your advertisement at the top of search engine results. For this strategy to be the most effective, you should try to bid for the top of the page, or at the very least the first page.
One aspect of targeting a search page location that you should keep in mind is that it can be costly to reach the top of a search engine result page. Ad campaigns that tend to be more successful with this strategy are ones that have relevant ads for the keywords they bid. We recommend having a strong call to action in your Google ad if you decide to use this bidding strategy.
4. Target Cost Per Click (CPC) – Improve Your Google Ads Keyword Bidding Strategy
If your Google Ads campaign goal is to generate more traffic for your website, the cost per click (CPC) bidding strategy is one of the easiest ways to do that. There are two ways that you can best target CPC for your ad campaign. The first is to manually set your maximum CPC bid for each ad that you run. The second way you can target CPC is to maximize clicks by setting a daily budget automatically.
Manual bidding is for advertisers who want to understand which ads and keywords are performing best. The maximize clicks strategy, on the other hand, allows Google Ads to manage your bids to get the most clicks possible with the budget that you have set. We recommend using manual bidding when targeting cost per click because it gives you the most control over how well your ads perform.
The most important aspect of manual CPC bidding is knowing how to calculate your max CPC bids. We’re going to show you how to calculate your max CPC bids from your conversion rate and conversion value. Before we can do this, you need to know your revenue per click for the ads you are running.
This data is readily available for you under the conversions column in your Google Ads account. The metric you are looking for is the conversion value per click. This is your total conversion value divided by the number of single clicks. Now that you know where to find this metric, you can calculate your max CPC bids from your conversion rate and conversion value. You can find your max CPC by using the formula below:
(Average Conversion Value/Desired ROAS) x (Conversion Rate) = Max CPC Bid
To show you an example of how to calculate your max CPC bid, let’s say you are running an ad for tennis shoes. The metrics for your ad are as follows:
Average conversion value = $425
Desired ROAS = 250%
Conversion Rate = 5%
(425/250) x 5) = $8.50
By plugging these metrics into the formula, you would get a max CPC bid of $8.50.
5. Target Cost Per Thousand Impressions (CPM) – Maximize Your Visibility
Cost per thousand impressions or CPM is a bidding strategy where you pay for each one thousand views your ad receives on the Google display network. This particular strategy is excellent for maximizing your companies visibility and outreach. You should NOT use this strategy to acquire leads or website traffic as there are more effective strategies for that.
The way this strategy works is different from those that intend to generate leads. With the CPM strategy, you are paying for the number of people that are seeing your ad on Youtube or the Google Display Network. Currently, you can only use display and video ads with CPM bidding. It’s important to remember that you are paying for your ads to show, whether they click your ad or not.
We recommend using this bidding strategy for companies whose ad campaign focuses on brand awareness. You shouldn’t use this strategy if the goal of your campaign is to generate conversions as there are less costly strategies to do that.
6. Target Cost Per View (CPV) – Boost Your Video’s Audience
This Google Ads keyword bidding strategy is excellent for improving the awareness of your video. Targeting cost per view (CPV) can only be used for video ads. With this strategy, you are only paying for views and engagements with your video. Engagements on your video include clicks on video overlays and banners.
Google Ads charges you for a view once a user has watched at least thirty seconds of your video or has interacted with your ad. Only use this bidding strategy if the goal of your campaign is to generate awareness for a company video. This form of advertising can be a great jump start for a video to attract more organic traffic.
7. Target Outranking Share – Outperform Your Competitors
With this keyword bidding method, you are directly going after your business’ competitors. The goal of this type of strategy is to showcase your ads above your competitors. In Google Ads, you can specify any website domain name that you want your ads to rank higher. You can also determine the percentage of time that you would like your ads to show above them.
It’s important to remember when using this strategy that Google Ads doesn’t guarantee that you will always rank above your competitor. That will be determined based on how much your competitor is willing to bid on ads. Keep in mind that this can be a risky strategy to use if you are a beginner.
The reason this strategy can be risky is that if your competitors are bidding high, you may end up spending far more than you originally planned. We recommend using this strategy if your company’s success relies heavily on outperforming your competitors. Targeting outranking share can be the catalyst that pushed your business ahead of your competition if used correctly.
8. Increase your Ad Quality Score – It Will Lower Your Bidding Price
One of the best ways you can lower your bidding price is by increasing your ad quality score. Your quality score depends on multiple factors, including:
- Click-through rate (CTR)
- Landing page quality and relevance.
- The relevance of each keyword to its ad group
- The relevance of your ad itself
Google doesn’t automatically choose the highest bidder in a keyword auction. Your ad quality score plays a vital role in Google’s bidding system. The mathematic formula for how you rank on Google Ads looks like this:
Your Ad’s Quality Score x Ad’s Max Bid Per Click = Your Real Bid
If you have a high ad quality score but a low cost per click, you will beat your competitors who have a high cost per click but a low quality score.
The reason auctions work like this is because Google only wants relevant ads to appear for keywords. Your ad can still win an auction even if it isn’t relevant; however, it will cost you a lot more.
9. Use Negative Keywords – It Increases Conversions
Negative keywords can be your greatest ally when it comes to increasing conversions. So what are negative keywords? In short, they prevent your ads from being displayed for search queries unrelated to your products and services.
Using these keywords is extremely helpful in sculpting the traffic your receive from your ads. For example, let’s say you are an artist trying to sell sculptures. By targeting the keyword “sculptures,” this would also include “how to make sculptures”. This is not relevant to your store as you only sell completed sculptures, not guidance on how to make them.
In this example, you would add the word “make” to your negative keywords list. This means any search query with the word “make” in it would not show your ad. By utilizing negative keywords, you will quickly see the conversion rate on your ads increase.
By increasing your conversion rate with negative keywords, you are also going to see your cost per conversion decrease. This is because you’re going to need to spend less to get the sale on your products. Lastly, your click-through rate is also going to be increased because your ads only show on search queries that are relevant to your business.