Welcome back to my 7 part series on AdWords. Part 1 was an Overview of AdWords, Part 2 I covered Campaign Types and in this post I mostly cover AdWords Bid Strategies.

Hopefully you have given some thought to your budget. This will help when determining your bid strategy and daily budget.

AdWords uses a cost-per-click system, which means you only pay when someone clicks on your ad. Generally speaking, the higher you bid, the higher your ad will appear. You can pay less for top positions with higher quality ads and high quality scores. Quality scores are Google’s way of rating the quality and relevance of your keywords and PPC ads.

Manual CPC

AdWords Bid Strategies

This option gives you a great deal of control over your bids and the maximum cost-per-click you could pay. For Manual CPC you can set the maximum on the ad-group level or on the individual-keyword level. You will probably find certain keywords more profitable and will want to allocate more of your daily budget toward those words. With that said, I recommend spending time to set your bids on the keyword level and not the ad-group level.

Automated Bidding

Automated Bidding

This approach essentially outsources the process of bid management to Google directly. It saves time and is probably the best fit for the hands-off business owner or marketer. With automated bidding, you have six different goals you can choose from. Let’s take a closer look at the specific goals:

Maximize Clicks

Max Clicks

The objective here is simply to get as many clicks as possible. AdWords will go for clicks within the target budget or within your predetermined daily budget. You can use this setting for a single campaign or as a portfolio strategy. A portfolio strategy groups multiple campaigns into a single strategy.

Target Search Page Location

This form of automation allows you to target the first position of the first page of Google. If you select this option, Google will target the top of the first search result by auto-adjusting your bid when a search term matches your keyword. AdWords is essentially helping you to automatically outbid every other advertiser. Be careful with this setting as it is an easy way to spend your budget quickly.

If you select the setting titled “anywhere on the first page search results page,” AdWords will raise or lower bids to meet the first page bid estimate. When you log in to your account, you’ll probably see a field titled “first page bid estimate” with a number filled in. I often review this field when I first launch a campaign and start with the lowest bids. This field populates and gives me an idea of how much I need to raise my bids to make it to the first page (assuming I am doing manual bids, which I almost always do).

Target Outranking Share

Target Outranking Share is essentially designed to help you outrank your competitors. You can add certain domains that you want to try to outrank. AdWords will automatically raise or lower bids in an effort to outrank the domains you selected. This setting works on the keyword level, on ad groups, and on campaigns in the Search Network.

A common question this strategy brings up is “what will happen if two competing domains are both utilizing this bid strategy?” In this case, it will come down to quality score and highest bid. Below are the steps for the setup:

  1. Benchmark Domain: Select the domains you would like to outrank. You can do this manually or, if AdWords has enough data, the platform will provide some options.
  2. Target Outranking Share: This is where you will enter the percentage of auctions you would like when attempting to outrank the domains. The higher the percentage you enter, the more aggressive the approach, which ultimately will require a higher budget.
  3. Max Bid Limit: This is simply the highest CPC you will tolerate. It can be set on the keyword, ad group, or campaign level. If your campaign is limited by budget, the system will not raise bids. Basically, you do not want to use the Target Outranking Share strategy if the campaign is limited by budget.
  4. Low Quality Keywords: You’ll have to select how you want AdWords to bid on low quality keywords. It can be very expensive to automatically raise your bids on keywords that have low quality scores. I would recommend leaving this setting on the default “don’t raise bid” for low quality keywords. Work on improving the quality scores, and then you can remove the default setting.

Target Cost Per Action

This is an automated bid strategy that adjusts bids to give advertisers as many conversions as possible at a preset Target CPA.

If you have conversions set up in your AdWords account, you are eligible to use this bid type. Essentially, AdWords reviews the conversion data and manipulates the bid to give you the best opportunity for a conversion. You can use this strategy as a standard strategy or as a portfolio strategy.

You will have to set a target cost per conversion. AdWords will leverage historical account information and use this data to decide on the best bid amount in order to achieve your Target CPA. If you review the conversions independently, you may have some that are more or less expensive than your Target CPA. AdWords is trying to reach an average CPA that is in line with your preset target. Below are the setup steps:

  1. Choose your Target CPA: You can do this manually or use the AdWords recommendation. AdWords will review your historical conversion data and provide a recommendation. If you choose your own, be prepared to log in daily to review traffic, and plan to increase the Target CPA if the amount of clicks are lower than you expected.
  2. Bid Limits: Do not input bid limits because it will interfere with AdWords automatic optimization of your bids.

Enhance Cost-Per-Click (ECPC)

ECPC raises your bids in situations that seem more likely to result in a conversion on your website and conversely drops your bid when it seems unlikely that a conversion will take place.

ECPC will raise your bid by up to 30% after incorporating any bid adjustments you have set. ECPC can lower your bid by 100% each time your ad is eligible to appear based on how unlikely AdWords determines that the click will lead to a conversion.

Target Return on Ad Spend (Target ROAS)


Target ROAS automates bids across campaigns, ad groups, and keywords to help achieve a target return that you predefine. This concept is similar to Target CPA but instead focuses on an overall return. There are a few conditions that must be met in order to be able to take advantage of this bid strategy. Conditions are listed below:

  • You must be tracking conversions.
  • You must set values for the conversions you are tracking.
  • Ad groups or campaigns must have at least fifteen conversions within the last thirty days, and thirty days of consistently reporting conversion values.
  • The keyword, ad group, or campaign must have received conversion values at a similar rate for at least a few days.

The history and conversion data allows AdWords to make better decisions about your future conversion cost. Therefore, the more data the system has, the better.

AdWords is using an algorithm to predict future conversions and incorporate your reported conversion values. So, make sure you really think through the conversion values prior to entering them into your account. AdWords will cap the Max CPC to maximize your conversion value, while trying to achieve an average return on ad spend that is equivalent to your target.

Using Target ROAS will differ depending on your campaign type:

  • Search Network and Search with Display Network: AdWords will attempt to achieve an average ROAS equal to your target across all keywords, ad groups, and campaigns that are using this strategy.
  • For Display Network Only campaigns, AdWords will work in the same manner as the above campaign type except ROAS cannot be used for mobile apps. You cannot utilize mobile installations or engage with your mobile app objectives.
  • For shopping campaigns, AdWords will attempt to achieve your Target ROAS across all ad groups and campaigns.

Here are the steps for setting up ROAS in AdWords:

  1. Select Bid Type as Target ROAS.
  2. Enter your Target ROAS on a campaign, ad group, or keyword level.
  3. Leave Bid Limits blank in order to let automatic optimization take place.

Tip: Before you add this bid type, review your “historical conversion value per cost data.” In order to review this data, you’ll need to select Modify Columns from the columns drop-down menu and add the “Conv.value/cost” column. Next, multiply your conversion value per metric cost by 100 to get your Target ROAS percent.

Once you’ve used your analytical skills and taken the time to review some historical conversion metrics, you can now use this figure to set your Target ROAS. Of course, you will also need to use discretion. If you think the figure is too high because you were overbidding in the past, simply lower the figure using your best judgement.

Maximize Conversions with Smart Bidding

Maximize Conversions automatically sets your bids with the objective of providing as many conversions as possible while spending your full daily budget.

By picking this option you are utilizing Google’s machine learning to take advantage of ideal bidding in real time. In order to utilize this bid strategy you will need to have conversion tracking enabled. Otherwise Google will not know what to optimize for.

Google uses historical information about your campaign to find the ideal CPC in real time that is most likely to result in a conversion.

Keep in mind in order to use this feature the campaign will need it’s own budget and not be part of shared budget.

Thanks for reading and stay tuned for the next post in this series.

I own a San Diego PPC company and would love to help you launch and manage a Pay Per Click Campaign. Check out my PPC Services and call me today for your no obligation quote.

Email brian@rocketpilots.com or call me today at 858-775-4110 or request your no commitment consultation.

Are you currently running an AdWords campaign? Leave a comment and let us know your experience with the platform.
Brian Hansen