Bidding is one of the most important methods to optimize a shopping campaign. With the right bid strategy, you’ll bring more revenue without overpaying. Today’s we’ll talk about bidding strategies in Google shopping campaigns, how they work, and when it makes sense to use them to get best results.
Maximize Conversion Value
Maximize conversion value is the default way to bid in smart shopping campaigns.
It is a smart bidding strategy, meaning bids will be set automatically based on the campaign conversion data and other details that Google detects about the person clicking on your ad in this moment.
Campaigns with smart bidding have a couple of features you should know about.
- They need time to ramp up - usually up to 2 weeks. It is called learning period. During that time, sales can be reduced, and bids and costs can experience swings. So, If you are cost-sensitive, set lower daily budget at the beginning.
- They perform better with more conversion data. I usually start using smart bidding only after an account gets at least 30 shopping conversions/month.
For low conversion situations, I find manual bids to perform better. The Manual CPC bidding strategy is covered below.
I start running all smart shopping campaigns with this bidding. I continue using if monthly shopping conversions in the account are below 30. Smart bidding uses conversion data across account as well.
Max Conversion Value with target ROAS
With the target ROAS (Return on Ad Spent) checkbox selected, bidding strategy tries to maximize conversion value WHILE keeping the ROAS above the chosen target.
This strategy can bring more sales more efficiently than Max Conversion value. However, it is more conversion-hungry. I feel comfortable using this strategy with 50 or more monthly conversions.
To get the most out of this strategy, you also need to choose the right ROAS target. Let’s see how that’s done.
Picking the target ROAS value
To choose the right ROAS target, you need to measure Conversion value / Cost during the evaluation period. To determine the evaluation period, let look at the time phases in a campaign with smart bidding.
- Learning Period. Days 1-14
Smart bidding campaign needs up to 14 days to ramp up.
During the learning period, campaign can experience lower performance, higher spend, and swings in CPCs. For caution, you may want to set lower daily budget at the start. Don’t make any changes to the campaign during learning period. Doing so would extend it.
- Evaluation Period. Days 15-28
The evaluation (control) period starts once learning period is over. Let the campaign run for at least 14 days. Google recommends measuring performance over longer time periods that have at least 30 conversions, such as a month or longer.
- Conversion Lag Delay Days 28+
Wait a few extra days for users to convert.
For example, if the client’s conversion time delay is 7 days, wait until day 35 before you assess data from the Evaluation Period (Days 15-28)
In your Google Ads, set the dates to the evaluation period , add the Conv. value / Cost column, and note the number.
This number is the effective ROAS that the campaign can deliver now. If you satisfied with it, set the campaign’s tROAS to a slightly lower target. This can improve revenue and ROAS.
For example, if the campaign has achieved Conv. value / Cost of 3.00, set tROAS to 280%.
If you want to compare performance with historical performance, include old shopping & Remarketing campaigns. This is because smart shopping campaign includes remarketing ads.
Continue monitoring smart shopping campaigns even after setting tROAS. Don’t let it run wild. Performance of a tROAS campaign may deteriorate after initial success of one or two months. And, overtime, your results can be affected by several factors such as holidays, weekends, special events, and your competitors.
Scaling smart shopping campaigns
The question of scaling (or increasing revenue) of smart shopping campaigns comes up a lot.
One obvious way to scale a campaign is by increasing budget.
Before doing that, make sure that the budget is 100% spent, meaning, you daily costs match your daily budget.
After budget is increased, your ads will have the potential to be shown more often. That should lead to more clicks and sales.
Another way to scale a campaign is by lowering the target ROAS value.
This tactics will be effective if your campaign has been hitting the existing ROAS target, and its budget is not 100% spent. Lowering the tROAS will indicate to the algorithm that it can spend more. This will cause your ads appear in more competitive and profitable auctions, eventually driving more sales.
Change tROAS or budget in small increments, and not at the same time. For example, change it 10-20% every couple of days.
350% -> 380% -> 400% -> 430% -> 450% -> $100 -> $115 -> $130 -> $150 -> $180
What about manual bidding?
You might ask why do I even talk about manual bidding, when smart bidding, according to Google, will “take much of the heavy lifting and guesswork out of setting bids”.
A few reasons.
Manual bidding can control bids and apply them granularly in a much better way than smart bidding.
Accounts that use all bidding types, usually have better results. With the exception of very small budgets, I have never seen a successful account that only uses smart, or only manual bidding strategies.
Manual CPC bidding gives you maximum control and flexibiity in setting bids. You set specific bids for individual SKUs.
I use manual bidding on new shopping campaigns because I want to understand how bids affect performance. Whether low bids or high bids bring more conversions, revenue, and profit. I start with low bids and gradually work my way up. This helps me find ideal bid level, and bring more revenue without overpaying.
I also stick with manual bidding on campaigns with low monthly conversions.
All in all, manual CPC is a straightforward and useful bid strategy at the start of your campaigns. It gives you maximum bidding flexibility, but it can become unmanageable with high number of products.
Enhanced CPC is Google’s first automated bidding strategy. It’s been around for many years. You will set maximum CPC, but actual bids will be adjusted up or down depending on how likely the bid gets a conversion. Costs per click can reach twice your max CPC.
eCPC has two settings: optimize for conversions, and optimize for conversion value. Make sure to choose optimize for conversion value on your shopping campaign.
Being Google’s first take at automated bidding, eCPC feels a bit clunky. It is not as effective in automation as tROAS, and not as good in controlling costs per click as Manual CPC.
Because of that, I have almost completely stopped using eCPC. I might only try it as an experiment on a campaign where nothing else works.
The Target Return on Ad Spend bidding strategy is used on standard shopping campaigns. Otherwise is very similar to the Maximize conversion value with tROAS that's used on smart shopping campaigns. So everything I've said about Max Conversion Value with tROAS, applies here.
The strategy will automatically set your bids to maximize your conversion value, while reaching an average return on ad spend that you choose. For example, by choosing tROAS to 350%, you are indicating to Google that you would like to get $350 in conversion value for every $100 spent.
tROAS is my favorite bidding strategy for shopping campaigns because it’s the most stable.
I usually put tROAS to a group of products, segmented into own campaign based on performance, brand, product category, or some other strategy.
Segmenting products is a big topic, it will be covered in the account structure video.
A good way to start with tROAS is try it on a best-selling product brand. For example, with 5 brands being sold in my account, one brands makes 50% of revenue. I put it in own campaign and set tROAS.
With tROAS, I give up some level of control, but it saves me time to focus to another products.
Maximize Clicks is a simple bidding strategy. where the company-wide bid limit is applied in the campaign settings.
From its description, you may think that strategy optimizes for cheapest clicks, but it seems, some conversion optimization happen as well.
Max Click is a good strategy to try when all else fails. Sometimes I use it on new campaigns.
Bid adjustments is not a bid strategy but a way to additionally modify bids depending on device, location, audience, hour of the day, or date of the week.
Bid adjustments can improve profitability of your campaigns by cutting wasted spend on the parts where your campaigns are less effective.
Use Bid adjustments when you notice a distinct trend.
For example, if mobile generates 50% of revenue, but spends 80%, I will apply a negative 10% mobile bid adjustment and monitor results. I don’t want to cut off mobile entirely because mobile clicks often lead to sales a few days later from a desltop ad, or even outside of Google Ads.
Bid adjustments are compatible with Manual CPC, Enhanced CPC, and Max Clicks bid strategies. They don’t work on tROAS or Maximize conversion value bid strategies with one exception: you can still set mobile bid adjustments of -100%.
This may sound confusing, and during my bid adjustment planning I consult this helpful table from Optmyzr
Bidding is one of the key areas in optimizing a shopping campaign. To get the best results, don't forget to pay attention to the other two areas: feed optimization, and account structure. But those are topics for another day.