Three years ago, I covered Google Ads bidding strategies. The post described each strategy, including the pros and cons. Although some strategies remain, automatic bidding has changed.
Autobids work best with values. Every conversion action, from a purchase to a form submission, should have value. Google can optimize for conversions, but without value, those conversions may not be the most profitable for advertisers. For example, a purchase is probably more valuable than an email signup. But a campaign optimized for both could result in more signups than purchases.
Each campaign should target a single conversion point. For ecommerce, this is typically purchases, although softer conversions such as signups make top-of-funnel campaigns easier.
Either way, designate the objective in the Google Ads campaign settings tab. For purchases, it is “Income”. Regardless of the bidding strategy, Google will optimize based on your desired goal.
![Screenshot of Google Ads admin setting for campaign objectives Screenshot of Google Ads admin setting for campaign objectives](https://www.practicalecommerce.com/wp-content/uploads/2023/10/Campaign-specific-goal-570x138.png)
To maximize purchases, set a “Revenue” campaign goal. Click on the image to enlarge.
Configuring conversion values
Conversion values in Google Ads are dynamic or static. Dynamic is best for shopping. This requires adjusted conversion codes to track advertising costs and revenue for each product. B2B advertisers often import conversion values offline because the sales process can be long.
![Screenshot of the Google Ads admin for assigning conversion values. Screenshot of the Google Ads admin for assigning conversion values.](https://www.practicalecommerce.com/wp-content/uploads/2023/10/Conversion-Value-300x156.png)
Dynamic values are best for maximizing purchases. Click on the image to enlarge.
The value of form submissions can be scaled: large conversions have higher hypothetical values, such as:
- Contact us: 60.
- Demo request: 40.
- Email registration: 20.
A “Maximize Conversion Value” bidding strategy will optimize for value rather than volume. Traffic may be less because Google targets users who are likely to make the highest value conversion.
Still, some advertisers prefer conversion volume to acquire customers at the top of the funnel for repeat sales. ” from Googleconversion value rules“allow advertisers to adjust values based on audiences, locations, devices, and more.
Either way, a bidding strategy aimed at “maximizing conversion value” makes it easier to use “target return on ad spend” (tROAS). A target ROAS bidding strategy is the best way to optimize profit rather than conversions or revenue.
Google defines target ROAS as Conversion value ÷ Expense. If revenue is $200 and ad spend is $100, the target ROAS is 200%. Google’s formula differs from a common ROAS calculation of (Income – Cost) ÷ Cost.
Climb the tROAS ladder
Think of automatic bidding as a ladder where each incremental step is more focused.
- First step: manual cost-per-click bidding without taking into account searcher signals. Ineffective.
- Step Two: Improved CPC bidding with manual bidding, but allowing Google to adjust for likely conversions.
- Step Three: Maximize Conversion Value Bidding, where Google controls all bids based on which searchers are likely to convert at a higher value.
- Step Four: Maximize Bids on Conversion Value with Target ROAS. Google controls all bids based on which searchers are likely to convert at a higher value And the return on advertising expenditure desired by the advertiser.
The goal is to reach the top tier for bidding at the target ROAS. A portfolio bidding strategy at target ROAS, i.e. across multiple campaigns, can track performance over time.
![Screenshot of a chart in Google Ads showing various performance metrics over two months Screenshot of a chart in Google Ads showing various performance metrics over two months](https://www.practicalecommerce.com/wp-content/uploads/2023/10/tROAS-Over-Time-570x319.png)
Graph performance over time with tROAS portfolio bidding. Click on the image to enlarge.
Long-term success
Keep conversion times in mind for any bidding strategy, including target ROAS. If conversions typically take seven days from the first click to buy, exclude the most recent seven days of data when evaluating the strategy.
In short, value-based bidding is the key to long-term success with Google Ads. It provides advertisers and Google with a clear priority for each conversion.