PPC campaign budgeting and bidding strategies

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 then 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

There is also a Shared Budget option available in both AdWords and Bing Ads. Available from the Shared Library, Shared Budgets allow 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 under spends, the leftover daily budget can be used by other campaigns.

Delivery method

Within the budget setting, you can choose if you want AdWords to pace how often your ads are shown, using Delivery method (Fig. 28).

With the Standard option, your budget is spent evenly throughout the day (or times when your ads are scheduled to show). This means your ads can be seen throughout the day, but they may not show at every opportunity as Google holds back delivery to ensure the budget lasts. This may also mean your entire budget isn’t used because Google’s algorithm is using historical data to predict how often the ads will be triggered to show and how much the clicks will cost.

With the Accelerated option, delivery isn’t optimized to help your budget last through the day, but instead it’s aimed at ensuring ads will show as often as the auction allows. It’s more likely your entire daily budget will be met.

The drawback of Accelerated is that if your budget is limited, your ads may stop showing early or midway through the day, and you’ll miss out on reaching people later in the day. Your ads won’t start showing again until the next day, when the daily budget gets reset.

The advantage of Accelerated delivery is that your ads will show more often. It also allows you to account for peaks and lulls in daily search volumes more easily. Googler Matt Lawson explains how it works here.

Fig. 28 – Budget and delivery method settings in AdWords

You can change this setting at any point if you decide to try a different delivery method.

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 (Fig. 29).

Fig. 29 – Bidding settings in AdWords

To see all of the bid strategy options available, click “Select a bid strategy directly” at the bottom. You’ll see all of the automated options listed at the top and the Manual CPC option at the very bottom (Fig. 30).

Fig. 30 – Campaign bidding options in AdWords

Smart Bidding strategies

Within the group of automated bid strategies is a subset of Smart Bidding strategies. These each rely 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 lots of signals, including the user’s device, browser, location and location intent and demographics, whether they are on a remarketing list, the day and time of day and more. AdWords 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 that have had 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 that have had 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.
  • 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 percent bid cap on ECPC and instead aims to achieve an average CPC that’s below the max CPC over time. It works best for advertisers that have had at least 30 conversions within the past 30 days. And ECPC can also be used with manual bidding.

Portfolio strategy

You may have several campaigns using the same target CPA or ROAS settings. With a portfolio strategy, a single strategy can be applied across multiple campaigns (You also used to be able to apply bid strategies at the ad group and keyword levels, but that was phased out in November 2017).
You can create a portfolio strategy when creating a new campaign, in campaign settings or in the Shared Library.

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 to run indefinitely.
  • Add ad extensions. 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, location options among others.

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