Navigating the world of online advertising effectively requires a clear understanding of how to manage your ad spend. Bid strategies are fundamental to this process, guiding how much you’re willing to pay for user interactions with your ads.
Grasping these strategies is a requirement for anyone who wants to maximise their advertising budget and achieve specific marketing objectives. This article will break down the types of bidding strategies, explore various types of bidding strategies, and explain when to use different types of bidding strategies to optimise your campaign performance.
What Is A Bid Strategy?
A bid strategy is an advertiser’s approach to determining the price paid for ad placements in digital advertising. Its core purpose in paid advertising is to help you efficiently achieve campaign goals. Without a clear strategy, ad spending can become inefficient.
In digital advertising, bidding works through instant auctions. When an ad is eligible to show, platforms run an auction.Advertisers submit bids, either manually or via automated systems, for the opportunity to display their ads.
Ad relevance, quality, landing page experience, and bid amount all contribute to an ad’s ranking, determining the winner. Automated bidding utilises machine learning to adjust bids in real-time, optimising for specific goals like conversions or return on ad spend.
Understanding this mechanism is foundational to appreciating the various types of bidding strategies available.
11 Types Of Bidding Strategies
The digital advertising ecosystem offers many types of bidding strategies, each suited to specific campaign objectives. Choosing the correct bid strategy is a pivotal decision impacting ad spend efficiency and campaign success.
The wrong choice means your budget goes to waste, and performance suffers. There’s no single best strategy; the optimal choice depends on your campaign’s objective, budget, data availability, and platform.
1. Manual CPC
Gives you direct command over your highest bid for each click, letting you control spending precisely. This bidding approach suits advertisers who prefer precise control and are willing to continuously fine-tune their campaigns.
2. Enhanced CPC (ECPC)
Adjusts manual bids up/down based on conversion likelihood. ECPC offers a smart balance between manual control and automated optimisation, helping to drive more conversions without fully relinquishing bid management.
3. Maximise Clicks
Automatically optimises your bids to secure the highest possible number of clicks without exceeding your budget. This strategy is perfect for campaigns focused on driving traffic to a website and increasing brand visibility.
4. Target CPA
Aim for a specific average cost per conversion. Target CPA is excellent for businesses with clear conversion goals, as it helps to acquire conversions at a predictable cost.
5. Target ROAS
Aim for a particular return on your ad spending, focusing on getting you the most value from each conversion. Aims for a particular return on your ad spending, focusing on getting you the most value from each conversion. This strategy is perfect for e-commerce businesses that prioritise the revenue generated from their ad spend.
6. Maximise Conversions
This aims to achieve the highest number of conversions possible within your set budget, without focusing on a specific cost per conversion. It’s an excellent option when your main objective is to drive as many conversions as you can and you have a flexible budget.
7. Viewable CPM (vCPM)
You pay for every 1,000 viewable impressions, this is ideal for awareness.vCPM ensures your ad budget is spent on ads that actually have a chance to be seen, making it highly effective for branding campaigns.
8. CPM
For broad reach, you pay for every 1,000 times your ad is shown, even if it isn’t actually seen. CPM is best suited for campaigns focused on maximising exposure and brand reach across a wide audience.
Aims for a specific percentage of impressions on the search results page. This strategy is valuable for advertisers who want to ensure their ads consistently appear for specific search queries, boosting brand presence.
10. Cost Per View (CPV)
Ensures you’re charged just for actual views of your video ad. CPV is an efficient bidding option for video campaigns, as you only pay when users genuinely engage with your content.
11. Cost Per Engagement (CPE)
You pay when users engage with your ad in a specific way. Selecting the appropriate strategy is vital. A well-matched strategy helps achieve objectives efficiently. Misaligning your strategy with goals can lead to frustration.
Understanding the different types of bidding strategies empowers better decision-making.
When To Use Each Bid Strategy Type
Learning when to use each of the different types of bidding strategies is paramount for successful campaign management. Strategies align with goals: traffic, visibility, leads, and sales. This section directly addresses what are the types of bidding strategies to use based on your campaign goals.
Strategies Focused On Clicks: For driving maximum traffic to your website
- Manual CPC: For precise control when you know your keyword performance.
- Enhanced CPC (ECPC): For manual control with automated conversion help.
- Maximise Clicks: When your priority is the highest traffic volume within budget.
Strategies Focused On Impressions: For maximising brand visibility and reach
- Viewable CPM (vCPM): When you need to ensure your display/video ads are seen.
- CPM: For broad, unfiltered reach where viewability isn’t the primary concern.
- Target Impression Share: When maintaining a dominant presence on the search page is crucial.
Strategies Focused On Conversions: For generating leads, driving sales, or encouraging specific actions
- Maximise Conversions: Automatically works to achieve the highest number of desired actions without exceeding your set budget.
- Target CPA: When you have a clear target cost per desired action.
- Target ROAS: For e-commerce or revenue-focused businesses aiming for a specific return on ad spend.
- Maximise Conversion Value: When different conversions have different monetary values, prioritising higher-value actions. These are key types of bidding strategies for direct business outcomes.
Strategies Focused On Video Views/Engagement: For campaigns centered around video content and maximising viewership or interactions
- Cost Per View (CPV): For video campaigns primarily aiming for maximum video viewership.
- Cost Per Engagement (CPE: For encouraging specific interactions with interactive ad formats.
Picking the right bid strategy isn’t a one-time decision; it’s something you continually refine. Your initial choice should align with immediate goals, but as data accumulates, different types of bidding strategies may become more suitable. Regularly reviewing performance and adapting your strategy leads to success.
Measuring And Analysing Bid Strategy Performance
Beyond standard metrics like Cost-Per-Acquisition (CPA) and Return On Ad Spend (ROAS, which are fundamental to understanding the efficacy of different types of bidding strategies, truly evaluating bidding effectiveness requires delving into more advanced analytics.
These advanced metrics and tools provide a deeper understanding of user behavior and campaign profitability, helping you refine your approach to the various types of bidding strategies.
Attribution Models
Standard metrics often attribute 100% of a conversion to the last click. But, customers typically engage with several advertisements and channels before completing a conversion. Attribution models then divide the credit among these different points of contact in their journey.
- First-Click Attribution: Gives all credit to the first ad click. Useful for understanding initial awareness generated by your ads, especially for longer sales cycles.
- Last-Click Attribution: Gives all credit to the last ad click. It’s straightforward and popular, working well for campaigns aiming for immediate action.
- Linear Attribution: Distributes credit equally across all touchpoints. Provides a balanced view of all interactions.
- Time Decay Attribution: Offers more credit to touchpoints closer in time to the conversion. Useful for campaigns with shorter sales cycles.
- Position-Based Attribution: Assigns more credit to the first and last clicks, with the remaining credit distributed among middle interactions. This recognises both initial exposure and final conversion drivers.
- Data-Driven Attribution (DDA): This is the most sophisticated, using machine learning to assign credit based on actual campaign data. It understands how your types of bidding strategies contribute across the entire user path.
Using DDA, you can see the true incremental value of each ad interaction, allowing your automated bidding to optimise for a more accurate understanding of performance.
- Application: Evaluating your bid strategy with diverse attribution models helps reveal which of your different types of bidding strategies perform best at different customer funnel stages, rather than focusing only on conversion. Additionally, Customer Lifetime Value (LTV) signifies the total revenue a company expects from a single customer over time.
Customer Lifetime Value (LTV)
Customer Lifetime Value (LTV): LTV calculates the complete revenue a business can expect to earn from an individual customer throughout their time as a client. For conversion-focused types of bidding strategies such as Target CPA or Target ROAS, optimising on initial conversion value could possibly overlook the long-term profitability of acquired customers.
Application
Integrate LTV data into your advertising platform (if supported) or use it for post-campaign analysis. If a bid strategy consistently acquires customers with higher LTV, even if their initial CPA or ROAS seems less impressive, it might be the more profitable choice in the long run.
This advanced metric informs the types of bidding strategies that build sustainable growth.
Other Advanced Analytics
Path To Conversion Reports
Analyse the sequences of interactions users have before converting. This reveals common user journeys and highlights which ad types or keywords contribute earlier in the funnel, informing adjustments to your types of bidding strategies that support different stages.
Cohort Analysis: Group users by their acquisition date (e.g., month) and track their behavior and value over time. This helps evaluate the long-term effectiveness of ad spend under specific bid strategies.
A/B Testing Bidding Strategies: Systematically test different types of bidding strategies against each other on similar campaigns or ad groups to scientifically determine which performs best for your unique goals.
Tools And Dashboards For Monitoring And Reporting
Platform-Specific Dashboards:
Google Ads, Meta Ads, and other platforms offer built-in reporting dashboards that provide detailed insights into bid strategy performance, including all the standard and some advanced metrics.
Google Analytics 4 (GA4):
Provides robust cross-platform data, advanced attribution modeling, and powerful exploration reports to analyse user behavior from various sources, complementing your bidding platform data.
Google Data Studio (Looker Studio):
A free data visualisation tool that allows you to pull data from multiple sources (Google Ads, GA4, Sheets) and create custom, shareable dashboards tailored to your specific KPIs and advanced metrics. It’s extremely helpful for getting a full picture of how types of bidding strategies are performing.
Third-Party Analytics Tools:
Solutions like Supermetrics or Funnel.io can aggregate data from numerous ad platforms into a single data warehouse or dashboarding tool, providing a consolidated view, especially for advertisers managing campaigns across many channels.
Regularly deep-diving into these advanced metrics provides a richer understanding of your bid strategy performance, enabling more informed optimisation decisions. This helps ensure that the different types of bidding strategies you employ are not just meeting immediate targets but also contributing to long-term business growth.
Troubleshooting & Common Pitfalls In Bid Strategies
Even with a solid understanding of what are the types of bidding strategies, advertisers can encounter challenges. Being aware of common pitfalls helps you navigate the complexities of digital advertising more effectively, ensuring your chosen different types of bidding strategies perform optimally.
Identifying Common Reasons For Underperformance
Insufficient Data: Automated strategies thrive on data. If a campaign or conversion action doesn’t have enough historical conversions (e.g., less than 15-30 per month for conversion-based strategies), the algorithm struggles to learn effectively, leading to erratic or poor performance. This is a primary reason why some different types of bidding strategies could falter.
Incorrect Conversion Tracking: If your conversion tracking is faulty, misconfigured, or tracing irrelevant actions, your automated bid strategy will optimise for wrong data. For instance, if you track page views as conversions instead of purchases, the system will aim for page views, not revenue.
Unrealistic Targets: Setting a Target CPA far below your historical average or a Target ROAS much higher than achievable can starve your campaigns of reach, as the system struggles to find conversions at your extremely aggressive price point.
Budget Constraints: An insufficient budget can limit the learning and scaling potential of automated bid strategies, particularly those trying to maximise volume (e.g., Maximise Conversions). The system may not have enough budget to explore higher-value opportunities.
Ad Creative And Landing Page Issues: Even the most sophisticated bid strategy cannot compensate for poor ad copy that doesn’t resonate, or a slow, confusing, or irrelevant landing page that deters conversions. The quality of your ad and destination experience directly impacts conversion rates.
Audience Targeting Too Broad Or Too Narrow: If your audience is too broad, the system might spend budget on unqualified clicks. If it’s too narrow, the bid strategy might struggle to find enough volume to optimise effectively, regardless of what types of bidding strategies you choose.
Account Structure And Campaign Settings: Disorganised account structures, conflicting negative keywords, or incorrect geographic targeting can all hinder a bid strategy’s ability to perform.
Practical Troubleshooting Steps And Solutions
Audit Conversion Tracking: This is step one for any conversion-focused strategy. Use platform diagnostic tools (e.g., Google Ads Conversion Diagnostics, Meta Pixel Helper) to confirm conversions are firing correctly and tracking the right values. Test your conversion paths regularly.
Review Data Volume: Check if your campaigns have enough conversions for automated bidding to work. If not, consider a simpler bid strategy (like Maximise Clicks) temporarily to gather data, or consolidate campaigns for more data.
Adjust Targets Gradually: If performance is off, adjust your CPA or ROAS targets in small increments (e.g., 10-20%) rather than large leaps. Allow time for the system to adapt.
Increase Budget (if limited by it): If your campaign is “limited by budget,” consider increasing it to allow the automated bid strategy more room to find conversions, especially for high-value targets.
Optimise Ad Creative & Landing Pages: Regularly A/B test ad copy, headlines, descriptions, and landing page elements to improve click-through rates and conversion rates. Ensure mobile responsiveness and fast loading times.
Refine Audience & Keywords: Regularly improve your audience targeting by using insights from your performance data. Expand or narrow as needed. Regularly add negative keywords to filter out irrelevant traffic, improving the quality of interactions for your chosen types of bidding strategies.
Check Campaign Settings: Double-check geographic targeting, device bids, ad scheduling, and any other settings that could inadvertently restrict your bid strategy. Simplify campaign structures where possible for better focus.
Be Patient Through Learning Phases: Automated bidding requires a learning period after significant changes. Avoid making frequent, drastic adjustments during this time; allow 1-2 weeks for the system to stabilise.
Conclusion On Strategic Growth Through Bidding Strategies
Bidding strategies are the backbone of successful paid advertising, transforming how businesses connect with audiences and achieve goals. From manual control to AI-driven optimisation, understanding the types of bidding strategies empowers informed decisions.
Choosing the right strategy, accurately tracking performance with standard and advanced metrics such as attribution models, and troubleshooting pitfalls are all interconnected. As digital advertising evolves with AI and predictive analytics, staying adaptable and continuously learning about the types of bidding strategies emerging will be key.
By mastering these principles, advertisers navigate online auctions confidently, ensuring campaigns deliver measurable, profitable results. Understanding the nuances of different types of bidding strategies is about strategic growth.
Continuous vigilance is crucial for sustained success. Optimising your bidding strategies empowers your business to effectively reach target audiences, providing actionable insights needed to secure lasting benefits and maintain your campaigns’ peak performance in the dynamic digital space. Contact Best Marketing Agency today for a personalised consultation!
Frequently Asked Questions About Bidding Strategies
What Is The Primary Difference Between Maximise Conversions And Target CPA?
Maximise Conversions aims to get the highest number of conversions within your budget, without trying to hit a specific cost. Target CPA, on the other hand, tries to achieve a specific average cost for each conversion, even if it means getting fewer conversions overall. Choose Maximise Conversions for volume, and Target CPA for cost efficiency
How Much Conversion Data Do I Need Before Using Automated Bidding Strategies Like Target ROAS Or Target CPA?
While platforms recommend varying amounts, a general rule of thumb is at least 15-30 conversions within the last 30 days per campaign or ad group for these types of bidding strategies to learn and optimise effectively. More data typically leads to better performance.
Can I Switch Between Different Types Of Bidding Strategies In An Ongoing Campaign?
Yes, you can. However, be aware that automated strategies usually enter a “learning phase” after a switch, during which performance might fluctuate. It’s best to allow 1-2 weeks for the system to adjust before making further changes, and ensure the new strategy aligns with your current campaign goals.
Why Might My Automated Bid Strategy Spend My Budget Too Quickly Or Too Slowly?
Spending too quickly might indicate your target (CPA or ROAS) is too loose, allowing the system to bid aggressively, or your daily budget is simply too high for your desired cost efficiency. Spending too slowly often means your target is too aggressive/tight, or your budget is too low for the system to find enough opportunities within your specified constraints.
Insufficient data, narrow targeting, or poor ad quality can also restrict spend for certain types of bidding strategies.
