A bid strategy is a plan or approach that determines how much an advertiser is willing to pay for a particular advertising campaign or for individual ad placements. Bid strategies are used in pay-per-click (PPC) advertising, where advertisers pay a fee each time their ad is clicked. PPC advertising is a common form of digital advertising, used on platforms such as Google Ads and Bing Ads.
Types of Bid Strategies
There are several types of bid strategies that advertisers can use, including:
Manual bidding is the most basic form of bid strategy. With manual bidding, the advertiser sets a specific bid amount for each keyword or ad group. The advertiser can then adjust these bids as needed, based on the performance of the campaign.
Automatic bidding is a form of bid strategy that uses algorithms to determine the optimal bid amount for a given ad or keyword. Advertisers can choose from several different automatic bidding options, including:
Cost-per-click (CPC) Bidding
CPC bidding is a form of automatic bidding that focuses on maximising the number of clicks an ad receives. With CPC bidding, the advertiser sets a maximum bid amount and the algorithm determines the optimal bid for each ad based on the likelihood of a click.
Cost-per-impression (CPM) Bidding
CPM bidding is a form of automatic bidding that focuses on maximising the number of impressions an ad receives. With CPM bidding, the advertiser sets a maximum bid amount and the algorithm determines the optimal bid for each ad based on the likelihood of an impression.
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Cost-per-acquisition (CPA) Bidding
CPA bidding is a form of automatic bidding that focuses on maximising the number of conversions an ad receives. With CPA bidding, the advertiser sets a target CPA (cost-per-acquisition) and the algorithm determines the optimal bid for each ad based on the likelihood of a conversion.
Bid modifiers are adjustments to an advertiser’s bid amount that are based on specific circumstances. Advertisers can use bid modifiers to adjust their bids based on factors such as location, device, or audience.
Choosing a Bid Strategy
There are several factors that advertisers should consider when choosing a bid strategy, including:
- The goals of the campaign: Advertisers should choose a bid strategy that aligns with the goals of their campaign. For example, if the goal of the campaign is to drive conversions, CPA bidding may be the most appropriate strategy.
- The budget of the campaign: Advertisers should consider their budget when choosing a bid strategy. Some bid strategies, such as CPA bidding, may require a higher budget than others.
- The competition: Advertisers should consider the level of competition in their industry when choosing a bid strategy. In highly competitive industries, it may be necessary to use a more aggressive bid strategy to stand out.
- The ad platform: Different ad platforms may offer different bid strategies or may be better suited for certain bid strategies. Advertisers should consider the capabilities of the ad platform they are using when choosing a bid strategy.
Implementing a Bid Strategy
Once an advertiser has chosen a bid strategy, there are several steps they can take to implement it effectively:
- Set clear goals: Advertisers should establish clear goals for their campaign and choose a bid strategy that aligns with those goals.
- Research keywords: Advertisers should research the keywords they want to bid on to determine the level of competition and the average cost-per-click for those keywords. This can help inform the bid amount that the advertiser should set.
- Monitor and adjust: Advertisers should regularly monitor the performance of their campaign and adjust their bid strategy as needed. This may involve adjusting bid amounts, adding or removing bid modifiers, or switching to a different bid strategy altogether.
- Use negative keywords: Advertisers can use negative keywords to exclude certain terms from their campaign, helping to improve the relevancy of their ads and potentially lowering their cost-per-click.
- Test different strategies: Advertisers should experiment with different bid strategies to see which one works best for their campaign. This may involve running A/B tests or using different bid strategies for different ad groups or keywords.
Keyword Match Types
There are several different match types that advertisers can use when bidding on keywords:
Broad match is the default match type in most PPC platforms. With broad match, an ad will be eligible to show whenever a user’s search query includes any of the keywords in the advertiser’s ad group, regardless of the order in which the keywords appear.
For example, if an advertiser is bidding on the keyword “women’s shoes,” their ad may be eligible to show for search queries such as “women’s sandals” or “men’s shoes for women.”
Phrase match is a more restrictive match type than broad match. With phrase match, an ad will be eligible to show whenever a user’s search query includes the exact phrase of the advertiser’s keyword, with additional words before or after the phrase.
For example, if an advertiser is bidding on the keyword “women’s shoes,” their ad may be eligible to show for search queries such as “black women’s shoes” or “women’s shoes on sale,” but not for queries such as “women’s sandals” or “men’s shoes for women.”
Exact match is the most restrictive match type. With exact match, an ad will only be eligible to show when a user’s search query exactly matches the advertiser’s keyword, with no additional words before or after the keyword.
For example, if an advertiser is bidding on the keyword “women’s shoes,” their ad will only be eligible to show for the search query “women’s shoes,” and not for queries such as “women’s shoes on sale.”
Advertisers should conduct thorough keyword research to determine the most relevant and valuable keywords for their business. This can involve using tools such as the Google Ads Keyword Planner or conducting market and competitive research to understand the keywords that are being used by competitors and by potential customers.
Once an advertiser has identified their target keywords, they should use a bid strategy that is designed to optimise the performance of those keywords. This may involve using different bid strategies for different keywords, depending on the match type and the goals of the campaign.
Frequently Asked Questions
Is it better to use manual or automatic bidding?
The best choice between manual and automatic bidding will depend on the goals of the campaign and the resources available to the advertiser. Manual bidding allows for more control over the bid amount, but it also requires more time and effort to manage. Automatic bidding can be more efficient, but it may not always produce the best results. Advertisers should consider their goals, budget, and level of competition when deciding which type of bidding is best for their campaign.
Can I use multiple bid strategies in a single campaign?
Yes, it is possible to use multiple bid strategies in a single campaign. Advertisers may choose to use different bid strategies for different ad groups or keywords, or they may use a combination of manual and automatic bidding. It is important for advertisers to regularly monitor the performance of their campaign and adjust their bid strategy as needed to ensure that it is effective.
How do bid modifiers work?
Bid modifiers allow advertisers to adjust their bid amount based on specific circumstances. For example, an advertiser may choose to increase their bid for mobile devices or for users in a specific location. Bid modifiers are applied as a percentage of the base bid amount, and they can either increase or decrease the bid. Advertisers can use bid modifiers to target their ads more effectively and improve the performance of their campaigns.
Can bid strategy affect the quality score of an ad?
Yes, bid strategy can affect the quality score of an ad. Quality score is a metric used by ad platforms to determine the relevance and quality of an ad. A higher quality score can lead to lower cost-per-clicks and better ad placements. Advertisers should choose a bid strategy that aligns with the goals of their campaign and focuses on driving relevant traffic to their website. This can help to improve the quality score of their ads and ultimately the performance of their campaign.