A little while back, my fellow CS specialist Lisa wrote a great post to guide advertisers towards picking the right match types. In her post, Lisa pointed to the benefits of testing the same keyword with different match types  to help determine which match type is the right fit for an advertiser’s account.
Now let’s explore a situation where you might want to actually keep running different match types simultaneously. In the below example, we have set a sample keyword (literally titled Keyword) to Broad Match and Phrase Match. Why would you want to want to keep these two particular keywords running simultaneously?
Well, let’s say after testing your keyword at different match types you have decided you really like Broad Match. There could be a whole host of reasons why you’ve decided to choose Broad Match. Say you want to cast a wider net to catch more search volume, or say you’ve decided to partake in some keyword discovery. By bidding on Broad Match, a more permissive/inclusive match type, you’ll have access to a wider variety of search queries through the Search Query Reports in AdWords (or QueryStream  for our WordStream users!). You can use these queries to add new keyword variations or to discover long-tail keyword ideas .
Now, although you’ve chosen to run with the Broad Match keyword, you know that there are also perks to using more restrictive match types – like increased relevancy. In addition, more restrictive match types like Phrase or Exact generally tend to cost less than less restrictive match types like Broad. Given this information, you certainly do not want to be paying more for the less relevant clicks coming in through Broad.
So how do you avoid spending more than you have to on the queries that actually do come in at Phrase? If you are trying to ensure that you are paying the lowest amount possible per click, you can employ a Tiered Bidding or Stacked Bidding strategy to help ensure you’re not paying more for less. With Bid Stacking, it is possible (in the words of Hannah Montana) to get the best of both worlds!
Related: How to Use Flexible Bid Strategies in AdWords 
So How Does Stacked Bidding Work?
You can see from the aforementioned example that even though you are bidding the same amount on both match types, the Broad Match keyword is being served over 66% of the time. Additionally, the average CPC for the Broad Match keyword is higher ($4.08) than the average CPC of its Phrase Match counterpart ($3.68).
One simple way to ensure that you pay $3.68 per click whenever possible is to keep the keyword at both Broad and Phrase, and bid higher on the more restrictive match type by about 10-15%. In this specific example, we would adjust our Phrase Match bid to $7.70. If our Broad Match and Phrase Match Keyword enters the same auction, our higher bid on Phrase will beat our Broad and win the auction . This in turn will ensure that we pay $3.68 per click whenever possible as opposed to $4.08. Adjusting your bids in such a fashion will make sure that AdWords will serve your Phrase keyword whenever possible, delivering you a lower CPC when queries are matched by Phrase.
Now that you know how to set up Stacked Bidding, you can start benefitting from the higher search volume of Broad Match while still paying lower CPCs whenever possible! Once you “mix it all together, you know that it’s the best … you get the best of both worlds!” (For those who are curious, I babysit a lot..)