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If running a Google Ads campaign, you're probably always looking for ways to improve your performance. One key metric you should be paying attention to is your bid strategy. This guide will teach you everything you need to know about bid strategy in Google Ads, including what it is, why it's essential, and how to improve it. A look at the Adwords glossary says that Bid strategy tells AdWords how aggressively to compete with the other bidders on the search network. That means you'll want to set a high target CPA or cost per acquisition, meaning you'll pay more for conversions than clicks.
What does this mean? Let's say someone is bidding $2 per click and has an average CPC of $0.30. Their bid strategy would be passive because they are not trying to make the most money possible from each click. However, if they were bidding $1 per click and had an average CPC of $0.50, their strategy would become aggressive because they are willing to spend less on clicks but still pay more for conversions.
As a general rule, if you're setting up a new campaign and have yet to optimize bids, it's best to start as conservative as possible, so you don't spend too much while trying to figure out what works best. Keep in mind that even when optimizing bids, your goal should never be just making more money but rather making money while also increasing conversion rates!
If you're running a business, you always look for ways to improve your bottom line. One way to do this is by tracking your bid strategy performance in Google Ads. By understanding your bid strategy , you can decide how much to bid on keywords and where to allocate your ad spend.
Additionally, tracking your bid strategy performance can help you identify areas of improvement and optimize your campaigns for better results.
For example, if the average cost per conversion is higher than the average conversion value, you may want to lower your bids or stop bidding on those keywords. Conversely, if the average cost per conversion is lower than the average conversion value, you may want to increase your bids or start bidding on more keywords related to that term.
The key takeaway here is that there's no one size fits all solution when it comes to determining what your best bid strategy should be. So keep reading below for tips on deciding what type of bid strategy will work best for you and your company!
The Importance of Deciding Your Type of Bid Strategy: Knowing what type of bid strategy works best for your business can help you reach optimal results. Here are a few examples to consider:
A CPA bid strategy considers how much money was spent acquiring each customer and measures its success as a percentage based on its conversion rate. Generally speaking, customers who have converted are worth more than those who haven't. Therefore, with a CPA bid strategy, you may want to increase your bids for terms with low conversion rates because they likely have high click costs but low conversions. On the other hand, if many people convert from clicks on keywords with high click costs but low conversion rates, then maybe these words would be worth decreasing your bids or even removing them altogether.
A CPC bid strategy considers how much advertisers pay every time someone clicks on their ad and usually takes into account factors such as keyword relevance, quality score, location relevance, and user intent, among others. In general, companies using a CPC bid strategy may want to increase their bids for keywords with low CTRs since they probably have high click costs but low conversions. On the other hand, if many people convert from clicks on keywords with high CTRs but low conversion rates, then maybe these words would be worth decreasing your bids or even removing them altogether.
VPC is essentially an equation that calculates the total revenue generated by a campaign divided by the total number of conversions generated. So does it effectively ask, What is my return on investment? Companies using VPC typically use this metric alongside metrics like cost per acquisition and click-through rate to decide how much to spend on certain types of campaigns.
To calculate your VPC, divide the amount of money you've made from your ads by the number of conversions. So if $2,000 has been generated from four conversions, your VPC would be $500 ($2,000/4). Next, you need to compare this against your target return on investment (ROI).
Depending on whether it meets or exceeds expectations, you may want to change how much you're spending on different types of campaigns. Once you know the kind of bid strategy that works best for your business, you'll be able to monitor your progress with just a few clicks.
There are a few key performance indicators (KPIs) that you should track when using a bid strategy in Google Ads. These KPIs will help you determine whether your bid strategy is working and if you need to make any changes.
For example, digital advertising conversion might mean signing up for email updates or downloading something from an advertiser's website. With offline advertising, conversion might mean filling out a questionnaire or purchasing something from an advertiser.
Conversions represent success rates rather than success itself; this means that high conversions do not necessarily translate into high profits because there may have been low costs involved. So it's essential to factor these into your equation.
With those KPIs in mind, what does the data say about my business with those KPIs in mind? For example, I'm selling a product for $100, and my competitors charge $120. I first notice that my CTR is only 5%, whereas theirs is 20%. So either they're doing something better than me or bidding way below what they should be paying to appear on the SERP next to me.
Either way, it seems like I could raise my bids for keywords so that I get seen more often. But why isn't my CTR higher? Let's see what happens when we look at my Impressions vs. Conversion Rate and Click Through Rate about their numbers. My Impression ratio is 4%, meaning that 1 out of 25 people who see my ads click on them--that's pretty good! But why am I getting fewer impressions than them? Either they're doing something different from me or bidding much less to show up next to mine.
Either way, it looks like I could raise my bids for keywords so that I get seen more often. All in all, it seems like I'm doing pretty well with my bid strategy, but there are some things I'll want to change over time as needed.
Remember that even though CTR is important for estimating profitability, the conversion rate matters most when it comes to profitability.
Are you looking to improve your bid strategy performance in Google Ads? If so, here are five ways you can do it :
Low-quality scores can result in higher costs per click because advertisers who rank lower are less desirable to Google AdWords than those who rank higher.
Bid strategy is one of the most critical factors in setting up a successful Google Ads campaign. It lets you control how much you're willing to spend on each click and can help improve your ROI. The key is to find the right balance for your business between cost-per-click and conversion rate. Keep these factors in mind when setting up your bid strategy KPI, and you'll be well on your way to a successful Google Ads campaign.
