Bidding strategies

Bidding strategies are the bidding methods used in online advertising systems that determine how much and in what way a platform spends its budget in the ad auction. The strategy you choose decides whether the system optimizes a campaign for clicks, impressions, conversions or revenue, and it is one of the key settings in every Google Ads campaign.

How bidding works

Search and display ads are sold in an auction that runs on every user query. A bidding strategy tells the system how high to bid in that auction to reach a defined business goal. Strategies fall into two groups:

• manual — the advertiser sets the maximum bids, for example a maximum CPC per click;
• automated (Smart Bidding) — the system sets bids in real time using machine learning and signals about the user, device, time of day or location.

The most common automated strategies include maximize clicks, maximize conversions, target CPA (cost per acquisition), target ROAS and reach-focused strategies billed on a CPM basis.

Practical application

Choosing a strategy depends on the campaign goal and the volume of data. A sales-focused online store will pick target ROAS to keep every advertising dollar profitable. A service company collecting inquiries will favor target CPA, controlling the cost of a single lead. A brand-awareness campaign benefits from reach strategies billed per thousand impressions.

The effectiveness of automated strategies grows with the number of collected conversions — the algorithm needs data to accurately predict the value of each auction. In practice, campaigns often begin with manual or traffic-focused strategies and, once enough history builds up, switch to goal-driven ones. Regular analysis and testing of different models helps find the configuration best matched to a given business's margins and seasonality.