I’m sure by now many of you have at least heard of Google’s Flexible Bid Strategies (or read Larry’s blog post on the Top 10 AdWords Features of 2013 ), which was announced in May of last year. Google created these strategies to help advertisers make more sense of their bidding and spend less time trying to figure out what to do. However, most are struggling to see what the benefits are, how and where to use them, and how to measure success.
In this post, you'll learn what they are, the different types of flexible bid strategies, and how to make them work for you.
What are Flexible Bid Strategies?
Flexible bid strategies automatically set bids to optimize for certain goals across set campaigns, ad groups and keywords.
Once you have created a strategy, it will be shared in your Shared Library in Google AdWords, making it accessible from one spot and making performance tracking easier. You can apply the strategy on the campaign, ad group or keyword level from each respective tab.
Measuring success will depend on which of the flexible bid strategies you employ, but ultimately, are you getting what you signed up for? Are you getting more conversions within your target CPA ? Are your CPC’s within your goals and budget? Reviewing the data will tell you if something is working or not. Since these strategies can be applied at different levels and you will be adding them with different goals in mind, be sure to go over the data thoroughly and make sure the numbers reflect your goals. Also check whether the leads and sales you are receiving are of the same caliber you were receiving (or better) than before you started using flexible bid strategies. This will help you define success.
The chart above is a quick overview of what the various flexible bid strategies are and when to use them. Now we’re going to take a deeper dive into how each of them work, where to apply them, and what you still have control over.
This strategy is something that many of you are probably familiar with, as it is essentially automatic bidding . This strategy will focus on increasing clicks while spending a target amount. The target spend amount is essentially the budget you are setting for any campaign/ad group/keyword that is utilizing this strategy. This is separate from the daily budget you will set on the campaign level for a campaign using manual bidding or another bid strategy.
This is different than automatic bidding as you can set this to specific ad groups or keywords instead of just at the campaign level, but you can still set this up at the campaign level as well. You can still control ad scheduling, but you can no longer set day or time of day bid adjustments. A note about the target spend: this is an amount that you set that is applied to any campaign, ad group or keyword using this strategy. This is separate from your campaigns’ daily budgets, as it is applied to those campaigns and ad groups that are using this flexible bidding strategy. With Maximize Clicks, you are giving Google control to change your bids in order for the areas using this strategy to work to gain you the most clicks. You can set a CPC bid limit to ensure that Google isn’t setting your bids higher than you would like to spend per click.
This strategy will allow for you to set up custom ad scheduling for day and time of day (not bid adjustments, but scheduling) where you can use the Maximize Clicks strategy. You can set a cap on bids for any keyword, ad group or campaign that is using this strategy, but if you do not set one AdWords will adjust your bids to an amount that will earn you the most clicks.
You should apply this strategy when you want to get the most clicks to your site for your target spend amount. A time you wouldn’t want to use this is when you have strict ROI or CPA goals.
Target Search Page Location
Want Google to change your bids so you will be on the first page of results, or even the top of the page? The Target Search Page Location option will automatically raise or lower your bids to show your ad at the top of the page or on the first page of the Google search results. This strategy only works for the Google Search Network. Once applied, it will only take a few minutes for your bids to start being changed by Google and can (and will) be updated several times a day. To set the initial bid amount you can do one of two things: you can opt for the automated approach and have Google set the bid and adjust for you, or set the bid yourself and then have Google adjust the bid for you.
Keep in mind – this doesn’t guarantee placement on the top of page or ad position on the first page of results. This strategy will attempt to achieve your target location, but final placement is going to be decided by the results of the ad auction .
This strategy gives you the option to show on the top of the first search results page or anywhere on the first search results page. If you are using the top of first page search results, Google will raise your bid to fit the top-of-page bid estimate. If you utilize the option to show anywhere on the first page, it will use the first page bid adjustment. To gain more insight into how Google will raise your bids, you can check to see what your first page and top-of-page bid estimates are in AdWords.
When using Target Search Page Location, you can set bid adjustments, in addition to mobile, location, day and time of day. You can also adjust your top-of-page or first page bids. This means you can actually bid a percentage of your first page or top-of-page bid estimate. You also have the ability to set a Max CPC bid limit and cap your bids. Setting these limits is important to ensure that you’re not spending more per click than you want to (from a cost or CPA goal standpoint). You’re also going to want to make sure that you are not going to exhaust your budget too quickly by the increasing bid adjustments.
Target CPA may sound familiar as it is similar to optimize for conversions. This option allows you to set bids to achieve an average CPA across all ad groups and campaigns using this strategy. With this approach, some conversions may cost more than the target and some may cost less, but overall AdWords will try to keep your cost-per-conversion  equal to the target.
Keep in mind – this strategy sets bid adjustments to reach your target CPA, superseding other bid adjustments you’ve set (except where you’ve set a mobile bid adjustment of -100%).
While Google may recommend not setting a minimum or maximum CPC bid limit, it may be in your best interest to do so, as you do want to make sure that your CPC bids aren’t going to be too high. Yes, Google will set your bids within your target CPA, but if you set a bid limit you can also help ensure that you are not going to be having high CPC bids and that you are instead getting the most out of your budget. Setting a minimum bid limit will help make sure that your bids aren’t too low and that you will stay competitive.
Bid limits give you more control and restrict how AdWords automates your bids.
There are two requirements to apply this strategy:
- You need at least 15 conversions in the last 30 days (the more data you have, the better Google can help to set bid adjustments)
- Your ad group or campaign has received conversions at a similar rate for at least a few days
Enhanced CPC helps you bid more effectively to maximize conversions. You can set your own max CPC bids for each keyword, and from here, AdWords will adjust your bids depending on what it believes is the likelihood of the click leading to a conversion. ECPC will only raise your bid up to 30% and can lower it as much as 100%. Google looks at real-time data to make your bids more effective, such as device, browser, location, and time of day when adjusting your bids during each ad auction.
Target Return on Ad Spend
Target Return on Ad Spend uses the conversion value you set when you set up your conversion tracking . If you haven’t set up your conversion value, you can do so in the Tools tab under Conversions.
Once this is done, AdWords will set the max CPC bid to maximize your conversion value. At the same time, AdWords will be trying to achieve an average return on Ad Spend that is equal to your target.
So, these are the AdWords flexible bid strategies that Google has to offer. If you’re a WordStream customer and you think that one might be right for you, contract your CS rep – we’ll be more than happy to give you more details and help you get up and running.
One thing I’ve learned from clients I’ve spoken to who are using different flexible bidding strategies is that you have be careful and really know what you’re doing. I’ve seen quite a few clients who have enabled a strategy and seen more spend in AdWords, yet the amount of conversions has stayed the same and the quality of the conversions had not changed.
Flexible bidding strategies will work differently than bidding rules, but with similar outcomes – Google will have more control over your PPC bid management (in some cases all control), so it pays to tread carefully.
Are you using flexible bid strategies in AdWords? Let us know in the comments!
Top image via Barry Silver