Understanding Bidding Basics
AdWords gives you several ways to bid for your ads, depending on what matters most to you and your business. Most advertisers focus on clicks, impressions, or conversions.
Now that you’re advertising on AdWords, you probably have a clear goal in mind for your ads. If you sell coffee, maybe you want to get more people to visit your shop. If you run a hiking club, maybe you’re aiming to get more people to sign up for your newsletter. And so on. Knowing what you want your ads to do will help you decide how to bid.
Tip
AdWords runs an auction every single time it has an ad space available — on a search result, or on a blog, news site, or some other page. Each auction decides which AdWords ads will show at that moment in that space. Your bid puts you in the auction.
You can focus on three different things when you bid: clicks, impressions, or conversions. Which would you choose? Let’s look at these more closely.
Focus on clicks
If your main goal is to have people visit your website, then clicks are a good place to start. Use cost-per-click (CPC) bidding and you’ll pay only when someone actually clicks on your ad and comes to your site.
CPC bidding gives you these choices:
- Automatic bidding: This is the easiest way to bid. Set a daily budget and let AdWords adjust your CPC bids to bring you the most clicks possible within that budget.
- Manual bidding: Take full control of your CPC bids. Manual bidding lets you set bids at the ad group level, or for individual keywords or ad placements, so you know you’re bidding just what you want for the clicks that mean the most to you.
Example
If you run a hiking club in Vermont, you might want to bid a lot for direct-hit keywords like “Vermont hiking” and a different amount for broader keywords like “hiking maps.”
Focus on impressions
Instead of paying by the click, you can pay by the number of times your ad is shown, if your campaign is targeting just the Display Network. That’s called cost-per-thousand impressions (CPM) bidding, since you pay for every 1,000 times your ad appears. If you’re mostly interested in getting your name or logo in front of lots of people, this is a smart option.
CPM bidding, like CPC manual bidding, lets you set bids at the ad group level, or for individual placements. Note that CPM bidding is only available for the following campaign types:
- “Display Network only – All features”
- “Display Network only – Remarketing”
Focus on conversions
With this advanced bidding method, you can set your account to tell AdWords the amount you’re willing to pay for a conversion. A conversion is a particular action you want to see on your website: often that’s a sale, but it could be an email signup or some other action. This is called cost-peracquisition (or CPA) bidding, since you’re acquiring one conversion.
To use CPA bidding you must have conversion tracking turned on, among other things, so CPA bidding is suited for intermediate and advanced AdWords users.
You can change your bid type any time you like. Use the “Bidding and budget” section on the Settings tab of any of your campaigns.
Determining a Bid Options Based on Goals
AdWords offers several bidding options that are tailored to different types of campaigns. Depending on which networks your campaign is targeting, and whether you want to focus on getting clicks, impressions, or conversions, you can determine which option is best for you.
- Drive customers to your website with cost-per-click bidding (manual or automatic).
- Ensure customers see your message with cost-per-impression bidding.
- Maximize conversions on your site with cost-per-acquisition bidding.
Each bidding option is suited for different kinds of campaigns and advertising goals. For the purposes of bidding, you’ll want to consider three basic types of goals, along with your current campaign settings.
- If you want to generate traffic to your website, focusing on clicks could be ideal for you. Cost-per-click (CPC) bidding — manual or automatic — may be right for your campaign.
- If you want to increase brand awareness — not drive traffic to your site — focusing on impressions may be your strategy. You can use cost per thousand impression (CPM) bidding to put your message in front of customers.
- If you want customers to take a direct action on your site, and you’re using conversion tracking, then it may be best to focus on conversions. The advanced bidding option, costper- acquisition (CPA) bidding, lets you do that.
Focus on clicks with CPC bidding
If you’re focusing on gaining clicks to generate traffic to your website, there are two cost-per-click bidding options you should consider: automatic CPC bidding and manual CPC bidding.
Automatic CPC bidding
Automatic CPC bidding is the simplest and most commonly used bidding option. All you have to do is set a daily budget, and the AdWords system automatically manages your bids for you, to bring you the most clicks possible within your budget.
Automatic CPC bidding could be a good option for you if the following describes your campaign:
- You have an advertising budget you’d like to reach consistently.
- You don’t want to spend time monitoring and updating individual cost-per-click (CPC) bids, and you’re willing to let the AdWords system update CPC bids automatically.
- You’re mainly interested in increasing website traffic.
- You’re mainly interested in increasing website traffic.
- You’re new to AdWords or don’t know exactly how much to bid for particular keywords or placements.
- Your campaign targets the Search Network, the Display Network, or both.
Automatic bidding isn’t a good choice for you if your advertising goals include maintaining a specific ad position or cost per conversion. Also note that it’s not possible to use automatic bidding with the following campaign types:
- “Search Network only – Product listing ads”
- “Display Network only – Mobile apps”
Example
You have a website that sells a variety of art supplies, and your main goal is to bring more customers to your site. You have a set amount that you want to spend on advertising each month, and there isn’t a particular product you want to emphasize most. Automatic CPC bidding lets you decide the overall amount of your budget, then you’ll find you the most customers based on that.
It isn’t possible to set individual CPC bids with automatic bidding, but you can set a maximum CPC bid for your entire campaign.
Manual CPC bidding
Manual CPC bidding is the default option to let you manage your maximum CPC bids yourself. You can set different bids for each ad group in your campaign, or for individual keywords or placements.
With manual CPC bidding, you can fine-tune your maximum CPC bids to help control the cost and volume of clicks on your ads. If you’ve found that certain keywords or placements are more profitable, you can use manual bidding to allocate more of your advertising budget to those keywords or placements.
Manual CPC bidding could be a good choice for you if your campaign fits this description:
- You’d like to control maximum CPC bids for individual ad groups, keywords, or placements.
- You’re mainly interested in increasing website traffic, not necessarily brand awareness.
- You don’t need to reach a target budget every month. (If you do need to reach a target budget, automatic bidding may be a better choice.)
- Your campaign targets the Search Network, the Display Network, or both.
If you’re not sure which keywords or placements are most profitable, or if you don’t have time to devote to managing manual bids, automatic bidding is probably a better fit for you.
Example
Although your website sells a wide range of art supplies, you’re most interested in selling paint brushes. With manual CPC bidding, even if your ad group has 15 keywords, you can choose to set a higher bid for only the keyword “paint brushes,” which will apply whenever that keyword triggers your ad.
Focus on impressions with manual CPM bidding
Manual bidding for impressions, also known as CPM bidding, lets you control the visibility of your ads by fine-tuning your maximum CPM bids.
Here are some cases which manual CPM bidding is recommended:
- Your campaign type is “Display Network only – Remarketing”, not Google Search Network.
- Your ads are designed to increase awareness, but not necessarily generate clicks or traffic.
- You prefer the traditional industry metrics of CPM (cost-per-thousand impressions) campaigns.
- You’re targeting particular placements, not just keywords. (Combined with placement targeting, bidding for impressions can help ensure your ads appear to a specific audience that will be interested in your ads.)
- You’re mainly interested in increasing brand awareness. Image ads and other multimedia formats often serve that purpose best, and these ad formats run on the Display Network. Your message is in the ad itself, so you don’t need people to click through to your site. This may apply to events (such as a television premiere) or political advertising.
Manual CPM bidding probably isn’t for you if the goal of your campaign is a direct response from customers, like buying a product or filling out a form.
Example
You’re giving a free concert in Paris, and want to get as many music lovers to come as possible. You’re running a campaign with vibrant image ads that share the date, time, and location of the event — everything a rock fan needs to know to show up. As long as people see your ad, they’ll know your whole message. CPM bidding can help you get it in front of as many eyes as possible.
Focus on conversions with CPA bidding
CPA (cost-per-acquisition) bidding is an advanced option that lets you bid directly for conversions.
Your campaign must meet a few requirements in order to be eligible to use CPA bidding:
- You have conversion tracking enabled.
- Your campaign has received at least 15 conversions in the last 30 days. The AdWords system requires this conversion history in order to make accurate predictions about your future conversion rate.
- Your campaign has been receiving conversions at a similar rate for at least a few days.
- Your campaign targets the Search Network, the Display Network, or both.
AdWords also recommends these characteristics:
- Your campaign has been using AdWords conversion tracking for at least two weeks. The AdWords system relies on historical conversion data, so the longer conversion tracking has been running, the more data the system has and the better job it can do optimizing your ROI. If your campaign receives low traffic, I recommend running conversion tracking even longer before trying CPA bidding.
- Your campaign is direct-response oriented. For example, the campaign focuses on generating sign-ups or sales on an e-commerce website.
- Your campaign has a single well-defined conversion type, such as a completed purchase or signup.
- Your campaign has a relatively stable conversion rate, with no major changes (such as redefining the conversion event or moving the conversion tracking code) within the last two weeks.
Note
If your campaign is already using CPA bidding and it drops below 15 conversions in the last 30 days, CPA bidding will remain enabled unless you turn it off. However, if you stop using CPA bidding, you won’t be able to enable it until you’ve reached the requirement.
Choosing your bidding option
To change your bidding option, follow these steps:
- Sign in to your AdWords account.
- In the Campaigns list, click the campaign name.
- Select the “Settings” tab.
- Click Edit next to the bidding option.
- Select your new bidding option.
- Click Save.
Choose a Bid for Your Keywords
When you select each keyword, you can choose how much you’re willing to pay whenever a customer searches on that keyword and clicks your ad. This is your keyword’s maximum cost-perclick, or max CPC, bid amount. Some advertisers like the control they maintain with manual bids, while others are comfortable letting the AdWords system make bids for them.
Use automatic bidding to simplify bidding
Automatic bidding is ideal for advertisers who don’t want to spend a lot of time setting bids, but would like to get the most clicks possible for their ads within their budget. You don’t need to specify individual bids for your keywords, ad groups, or placements. All you do is set a daily budget, and the AdWords system automatically adjusts your max CPC bids to bring you the most clicks possible within your budget. For more control over your bids, you can set a CPC bid limit if you don’t want to exceed a particular price per click. Note that it’s not possible to use automatic bidding with the following campaign types:
- “Search Network only – Product listing ads”
- “Display Network only – Mobile apps”
Use manual bidding for more control over bidding
This is the default option to let you manage your max CPC bids yourself. You can set bids at the ad group level, or for individual keywords. Your ad group’s default bid amount will be applied to all keywords in your new campaign’s ad group. You may change your bid amount at any time for any or all keywords. You also may change this value for individual keywords via the max CPC column on the Keywords tab.
Tips
- New to Adwords and not sure what keyword bid amount to set? Many advertisers start with a max CPC bid of US$1.
- When using automatic bidding you can easily switch to manual bidding which gives you full control to set the bid amounts yourself.
Use AdWords tools to help choose a keyword bid
Some tools help you identify keywords that you may want to adjust manually. Other more advanced tools do the bidding for you, based on an amount you select.
- The Opportunities tab in your account can help you identify which of your keywords seem to be good candidates for bid changes. Suggestions are for increased bids (to help capture more clicks) and decreased bids (to help lower your costs). Find out how to use the Opportunities tab.
- The Bid Simulator runs “what-if” scenarios such as: “How many more impressions would I have received if I had raised my bid by US$0.10?” so you can adjust your bids to the right level for your budget. The simulator doesn’t predict the future, but it does estimate the click, cost, and impression data that your ads would have received over the last seven days had you set higher or lower keyword bids.
- Enhanced CPC is a bidding feature that looks for ad auctions that are more likely to lead to sales for you, and then raises your max CPC bid up to 30 percent to compete harder for those clicks. When it sees auctions that don’t look promising, it lowers your bid. That way you get more sales and conversions out of the ad dollars you spend.
- Conversion tracking is an advanced feature that shows you which keywords most often lead customers to take the actions you want them to take (these actions, such as a purchase or newsletter signup, are called conversions). Tracking your conversions can help you decide whether to increase your max CPC for keywords that are performing well, and decrease it for those that are underperforming.
Find keyword bids for first page ad position
If it’s important for you to have your ad show on the first page of Google search results, first page bid estimates will show you an approximate CPC bid needed for your ad to regularly reach the first page of Google search results when a search query exactly matches your keyword. The estimate is based on the keyword’s Quality Score and current advertiser competition for that keyword, so there’s no guarantee you’ll consistently be on the first page. Learn about viewing first page bid estimates.
Find keyword bids for top of page ad position
If your goal is to have your ad in the top spot on the first page, top of page bid estimates will show you an approximate CPC bid needed for your ad to appear above the first page of Google search results when a search query exactly matches your keyword. This estimate is similar to the first page bid estimate. Learn about viewing top of page bid estimates.
How to change your keyword bids
If you’d like to replace some of your original bids with new bids, here’s how: on your Campaigns tab, click the Keywords tab. Then, in the “Max. CPC” column of the table, click the bid you want to change and enter a new bid amount.
Tips
- If you have a campaign that targets Google search and the Display Network, AdWords suggests using your keyword bid for both networks.However, if you prefer, you can set a Display Network bid that will override all keyword bids for the Display Network.
- If your campaign targets only the Display Network, AdWords suggests setting ad group bids for all your keywords. They also encourage you to set specific bids for your keywords based on how they’re performing. If you use Display Network bids, they’ll override any of the individual keyword level bids.
Choose a Bid Amount That Works for You
For cost-per-click bidding campaigns, you set a maximum cost-per-click (Max CPC) that’s the highest amount that you’re willing to pay for a click on your ad.
Using Max CPC to bid strategically, you can increase your account’s return on investment (ROI) and spend your budget on the keywords and placements that are proven to work for you.
In general, evaluating your bids over time can give you the best idea of whether you’re on the right track to reach your goals. You can also use the Bid Simulator and first page estimates to consider other bidding strategies.
The maximum cost-per-click (Max CPC) bid is the highest amount that you’re willing to pay for a click on your ad.
There’s no one recommended bid amount that works best for everyone. The right Max CPC bid for you will depend on evaluating the cost of your keywords, the type of campaign you’re running, and your profits.
Bidding strategy basics
To get the best results from your campaign, it’s important to know how to bid strategically. There are three basic steps to strategic bidding:
1. Identify how much your keywords cost in comparison to how much revenue they bring in.
2. Update your bids as needed to maximize your return on investment.
3. With enhanced campaigns, set bid adjustments to gain more control over when and where your ad appears.
Example
Let’s say you own a skateboard shop. You profit $5 from every skateboard purchase a customer makes, and you’ve seen that about one in five visits to your site results in a purchase. To make sure you keep profits rolling, you should spend less than $1 for a click on an ad promoting one of your skateboards. So you should set your Max CPC bid as less than $1. And by continuing to experiment, you can find a lower Max CPC bid, and increase your profits even further.
If you discover that your ads perform well at times when teenagers are likely to be surfing the web on their mobile phones, you can set a bid adjustment to increase your Max CPC bid for mobile devices, and on Friday nights.
If you’re not sure what Max CPC bid to set, try starting with $1. You can always change your default bid or bids for specific keywords or placements at any time. Your default maximum CPC for your ad group will be applied to any keywords and placements for which you haven’t set an individual CPC bid.
Tip
Don’t have the time to evaluate your bids? If you’d prefer to let Google do the work for you, then automatic CPC bidding may be a good option. With automatic CPC bidding, you set a daily budget, and AdWords will help adjust your cost-per-click (CPC) bids to receive the most possible clicks within your budget. Although you can still set a Max CPC to limit the most you spend for a click, it isn’t necessary to do so. Note that it’s not possible to use automatic bidding with the following campaign types:
- “Search Network only – Product listing ads”
- “Display Network only – Mobile apps”
Experiment and evaluate your advertising profits
We recommend editing CPC amounts in small increments. Once you’ve set new maximum CPC amounts, see how many clicks your keywords begin to accrue, and whether they lead to business results on your website, before editing again. Also, remember that Internet traffic is always changing, so it’s important to re-evaluate your CPC bids regularly.
Once you’ve collected enough data, you’ll be able to identify how profitable your keywords are with their current cost-per-click (CPC) bids. You can then edit their maximum CPCs accordingly. If a keyword has a low average CPC but each click converts well, for example, you may try increasing its maximum CPC. This could improve the keyword’s position, giving your ads more exposure and potentially increasing your ROI.
Or, if a keyword has a high average CPC but clicks seldom result in conversions, you may try reducing its maximum CPC. A lower maximum CPC is likely to decrease the keyword’s average position, the number of impressions and clicks it receives, and, as a result, its cost. Not only can this strategy improve your ROI on low-performing keywords, but it frees up part of your budget to invest in more valuable keywords. Over time, if it continues to perform poorly, you may wish to delete that keyword entirely.
Tip
If you want to move beyond the $1 bid, I suggest you set up conversion tracking to measure the performance of your keywords and placements. Conversion tracking is a free tool that will tell you how many clicks on your ads turned into conversions on your website. It shows you what happens after a user clicks on your ad, whether they purchased your product or signed up for your newsletter.
Tools to get the most from your bids
Google offers several tools to help guide you in choosing a bid that will work for your goals. After your campaigns run for a few weeks, the AdWords tools will have collected enough information to give you more personalized recommendations:
- Get answers to “what-if” scenarios like, “How many more impressions would I get if I raised my bid by $0.10?” from Bid Simulator. This tool can help you tweak your bids to just the right level for you.
- Want your ad to show on the first page of Google search results? First-page bid estimates will show you how much you’d need to bid to get there.
- Your Opportunities tab also highlights CPC bid ideas related to goals that you choose.
- See how often some keywords get searched, and get cost estimates at a glance with Traffic Estimator.
Bidding recommendations for the Search and Display Networks
Search Network: You might want to edit your bids to show your ad higher or lower on the search results page. For example, if you find that your ad is performing well on some keywords but not on others, you may want to raise your bid for the well-performing keywords and consider lowering it on others that aren’t performing as well.
Display Network: You set a maximum bid for all automatic placements. For managed placements, you can set different bids for different sites. Then if some managed placements are performing well, you can consider raising the bid for those specific placements. Set bid adjustments to increase or decrease bids for targeting methods like placements and topics.
Both networks: For more control over your bidding strategy, you can set campaign-level bid adjustments in enhanced campaigns. They increase or decrease your bids for searches occurring on mobile devices, in specific locations, and at particular days and times.