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Setting the right Google Ads bidding strategy is crucial for a successful advertising campaign. Many advertisers make mistakes in this step, leading to poor results. This article will guide you through optimizing your Google Ads bidding strategy for maximum performance.
Understanding Google Ads Bidding Options
When creating a new campaign, such as a Performance Max campaign focused on sales, you’ll encounter the bidding settings. Google Ads offers various bidding options, each suited to different goals. The default option for Performance Max is “Conversion Value,” alongside the “Conversions” option.
- Conversion Value: Google Ads prioritizes conversions with higher value for your business. For example, if your average order value is $40, but some customers spend $80 and others only $20, Google Ads will focus on potential customers likely to spend $80.
- Conversions: All conversions are considered equal in value. Google Ads will strive to bring in as many conversions as possible without differentiating their value.
Initially, you can use the default option. However, in the long run, setting a Target ROAS (Return on Ad Spend) or Target CPA (Cost Per Acquisition) will yield better results.
Target ROAS and Target CPA
- Target ROAS: You set the desired return on your ad spend. For example, a 300% ROAS means that for every $100 spent on advertising, you want to generate at least $300 in revenue.
- Target CPA: You set the maximum cost you’re willing to pay for each conversion action (e.g., sign-up, purchase). For example, a $50 CPA means you only want to pay up to $50 for each lead.
Setting Target ROAS or Target CPA is crucial, but it’s also challenging to get right from the start. Google Ads will often suggest setting a target after a short campaign run. However, avoid rushing this process.
When to Set Target ROAS/CPA
It’s recommended to wait at least one month after launching your campaign before setting Target ROAS/CPA. This allows you to:
- Determine realistic ROAS/CPA: You need sufficient data to understand your campaign’s actual performance and set achievable goals.
- Avoid initial fluctuations: Campaign performance often fluctuates significantly in the initial phase as Google Ads learns and optimizes.
- Ensure stability: Continuously changing targets will disrupt Google Ads’ optimization process.
How to Set Initial Target ROAS/CPA
When setting your initial Target ROAS/CPA, start with a realistic number based on your campaign’s performance during the first month. Avoid setting overly ambitious targets. For example, if your average CPA in the first month was $35, set your initial Target CPA to $35, then gradually increase the target over time.
Important Considerations
- Initial performance dip: After switching to Target ROAS/CPA, campaign performance might temporarily decrease for a few days. This is normal and shouldn’t cause concern.
- CPC might increase: Using Target ROAS/CPA often leads to higher CPCs compared to other bidding strategies. However, if ROAS/CPA improves, the increased CPC is acceptable.
- Patience and consistency: Be patient and avoid changing targets too frequently. Small, consistent adjustments over time will yield better results.
Conclusion
Bidding strategy is a key factor determining the success of your Google Ads campaign. Choosing the right strategy and setting appropriate targets will help you optimize ad spend and achieve maximum business results. Remember, patience and consistency are key to success in Google Ads advertising.