What is a bid strategy?

In paid advertising, a bid strategy is essentially the rulebook you give to an ad platform, like Google Ads or Meta Ads, telling it how much you're willing to pay for various interactions with your ads. This isn't just about setting a price; it's about aligning your spending with your campaign's ultimate goals. Whether you want people to click your ad, visit your website, fill out a form, or make a purchase, your bid strategy guides the platform's automated system in real-time auctions.

Think of it as giving instructions to a smart assistant. You tell it what you want to achieve (e.g., 'get me as many sales as possible') and how much you're generally willing to spend, and the assistant then works to get the best results within those parameters. These strategies can range from very hands-on, where you manually set bids for every keyword, to highly automated, where advanced algorithms use machine learning to optimize bids moment by moment.

Why bid strategy matters

The bid strategy you choose has a significant impact on the success and efficiency of your paid advertising campaigns. It's not just a technical setting; it's a strategic decision that affects your return on investment (ROI), how many people see your ads, and ultimately, whether you achieve your business objectives.

• Optimizing ad spend: A well-chosen bid strategy helps you get the most value for your advertising budget. Instead of overpaying for clicks that don't convert or underbidding and missing out on valuable impressions, a good strategy ensures your money is spent wisely.
• Achieving specific goals: Different business goals require different bidding approaches. A bid strategy focused on maximizing website traffic will behave differently than one designed to maximize sales. Choosing the right one ensures the platform works towards your primary objective.
• Competitive edge: In crowded ad auctions, an intelligent bid strategy can help you compete effectively. Automated strategies, in particular, can make lightning-fast adjustments based on countless signals, often outperforming manual efforts in complex environments.

Types of bid strategies

Ad platforms offer a variety of bid strategies, broadly categorized into manual and automated options.

Manual bidding

With manual bidding, you directly set the maximum cost-per-click (CPC) you're willing to pay for your ads. This gives you precise control over your bids at the keyword or ad group level. While it offers granular control, it can be very time-consuming, especially for large campaigns, and may not be as efficient as automated strategies in dynamic auction environments.

Automated bidding (smart bidding)

Automated bidding strategies, often called Smart Bidding in platforms like Google Ads, leverage artificial intelligence and machine learning to optimize your bids in real-time. These strategies analyze a vast array of signals (like device, location, time of day, audience, search query, etc.) to predict the likelihood of a conversion and adjust bids accordingly. This approach often leads to better performance and saves advertisers a lot of time.

Common automated strategies include:

• Maximize clicks: Aims to get you the most clicks possible within your budget. Useful for driving traffic to a new website or increasing brand awareness.
• Maximize conversions / target CPA (cost-per-acquisition): Focuses on getting as many conversions (e.g., leads, sales) as possible, or hitting a specific average cost for each conversion. This is ideal for performance-focused campaigns.
• Target ROAS (return on ad spend): Designed for e-commerce, this strategy helps you achieve a specific return on your advertising investment by optimizing for conversion value.
• Enhanced CPC (ECPC): A hybrid strategy that adjusts your manual bids up or down slightly in real-time to increase conversions, while still giving you some manual control.

Best practices for managing bid strategies

To get the most out of your bid strategies, consider these practical tips:

• Align with your campaign goals: Always choose a bid strategy that directly supports what you want to achieve. Don't use a traffic-focused strategy when your primary goal is sales.
• Ensure robust conversion tracking: For automated strategies, accurate conversion tracking is non-negotiable. Without reliable data on what constitutes a conversion, the algorithms cannot optimize effectively.
• Monitor performance regularly: Don't set a bid strategy and forget it. Regularly review key metrics and make adjustments as needed. Look for trends and opportunities for improvement.
• Allow for a learning phase: Automated strategies need time to gather data and learn. Avoid making frequent, drastic changes to bids or budgets, especially in the first few weeks, as this can disrupt the learning process.
• Test and iterate: Consider running A/B tests with different bid strategies or settings to see which performs best for specific campaigns or ad groups.

Ultimately, choosing and managing your bid strategy is an ongoing process of optimization. By understanding your goals, leveraging the right tools, and continuously monitoring performance, marketing teams can significantly improve the efficiency and effectiveness of their paid advertising efforts.