PPC campaign budgeting and bidding strategies

Here’s how daily budgeting works in PPC campaigns. Plus, learn about all of the automated bidding strategies and options available.

Daily budgeting

Budgets are set at a daily spend level. This is an average, not a maximum. There may be times when the daily budget isn’t met and others when the daily budget overspends – by as much as twice the daily budget. 

Google will balance it out so that you don’t spend more than the daily budget times the average number of days in a month (30.4). This allows the campaigns to account for lulls and spikes in daily search activity.

Managing spend by limiting your budget – meaning your ads will not show all day – is not ideal. You want to avoid seeing the “Limited by budget” notice in your campaigns.

Many businesses operate with set monthly or quarterly media budgets. Sometimes a campaign might have its own budget line, but often paid search gets one monthly budget. 

For example, if you’re given a monthly budget of $10,000 to spend on PPC, you’ll need to decide how to split it between the search engines and how much budget to give each campaign.

This is why budgeting often drives how you organize your campaigns. 

If you organize your campaigns by stage of the marketing funnel or conversion type, you can set budgets based on how much each is worth to your business or based on how much click volume you’ll need to meet your goals. 

On the other hand, you may have distinct budgets allocated by product type, brand or offer. Segmenting those into distinct campaigns will then allow you to control those budgets.

Shared budgets

A Shared Budget option is also available in both Google Ads and Microsoft Advertising. Available from the shared library, it allows you to allocate one budget across multiple campaigns. The search engines will automatically adjust how the budget is allocated. 

With a shared budget, If one campaign underspends, the leftover daily budget can be used by other campaigns.

Bidding method

The next campaign setting is called bidding, but it’s really about setting the type of bidding you’ll use in the campaign.

Google is keen to get advertisers to select one of its automated bidding solutions rather than set bids manually.

The Bidding section defaults to a guided walk-through based on your other campaign settings.

Bidding-settings.png

To see all the bid strategy options available, click Select a bid strategy directly at the bottom. You’ll see all the automated options listed at the top and the Manual CPC option at the bottom.

Campaign-bidding-options-google-ads.png

Smart Bidding strategies

Within the group of automated bid strategies is a subset of Smart Bidding strategies. Each relies on machine learning algorithms, which means they use historical data to predict conversion outcomes. 

They need a sizeable amount of historical data to make these predictions and set bids to meet conversion or conversion value targets. The bids are made in real-time at each auction based on many signals, including:

• The user’s device.
• Browser.
• Location and location intent.
• Demographics.
• Whether they are on a remarketing list.
• The day and time of day and more. 

Google Ads conversion tracking must be set up for Smart Bidding strategies to work for Search campaigns.

Smart Bidding strategies

• Target CPA (cost per acquisition): You set your target CPA – how much you’re willing to spend for a conversion – and Google will aim to set bids to meet that CPA target on average. It works best for advertisers with at least 30 conversions within the past 30 days.
• Target ROAS (return on ad spend): This strategy aims to maximize revenue or conversion value based on the target return on ad spend you set. The ROAS formula is: Conversion value ÷ ad spend x 100%. It works best for accounts with at least 50 conversions within the past 30 days.
• Maximize Conversions: This is the newest Smart Bidding option. It’s meant to yield the greatest number of conversions and will aim to spend the full daily budget.
• Maximize Conversion Value: Maximize conversion value bidding will still occur for every conversion. Still, the value varies on the type of conversion (low impact versus high impact), and the cost stays within your specified budget. When you create a maximize conversion value bid strategy, you’ll set a Target ROAS.
  • When you are using Maximize conversion value without a Target ROAS set, we’ll aim to spend your budget to maximize conversion value for your campaigns.
  • When you are using Maximize conversion value with a Target ROAS set, we’ll help to get as much conversion value as possible at the target ROAS.
• Enhanced CPC (ECPC): This strategy raises the max CPC bid in auctions that the algorithm predicts are more likely to convert and lowers the bid in auctions deemed less likely to convert. In May 2017, Google removed the 30% bid cap on ECPC to achieve an average CPC that’s below the max CPC over time. It works best for advertisers with at least 30 conversions within the past 30 days. ECPC can also be used with manual bidding.

Additional settings

In the next set of settings, you can:

• Choose a start and end date if desired. If you do not select a start date, the campaign will activate when you hit “Save” at the end of the setup process. If you do not select an end date, the campaign will continue indefinitely.
• Add ad assets. These can also be added later, along with ad copy and keywords.
• Assign audiences and more. Again, it’s not necessary to add audience targeting during the initial setup. This can be added later when you build out the campaign.

Be sure to click the Additional settings link at the bottom of the settings page! Here you’ll find more extension options and settings for ad rotation, ad scheduling, and location options, among others.

Read more of Search Engine Land’s Complete Guide to PPC (Pay-Per-Click) Advertising:

• What is PPC – Pay-Per-Click marketing?
• Chapter 1: Where PPC ads appear
• Chapter 2: How the PPC ad auction works
• Chapter 3: How to build an effective PPC strategy
• Chapter 4: How to track and measure PPC campaigns
• Chapter 5: How to set up up your PPC account
• Chapter 6: How to structure PPC campaigns
• Chapter 7: What to know about PPC keyword research and match types
• Chapter 8: How ad assets work in PPC
• Chapter 9: How to set up a paid search campaign
• Chapter 10: PPC campaign budgeting and bidding strategies
• Chapter 11: Ad rotation, scheduling and location setup
• Chapter 12: Search ads automation
• Chapter 13: How to set up a Performance Max campaign
• Chapter 14: Beyond keyword targeting in Search: location, device, audience and demographic
• Chapter 15: Bidding and bid adjustments in paid search campaigns