Bidding on Performance Max campaigns / 2023 Guide

Andrey Kisselev

Andrey Kisselev

Discover the pros, cons, and practical tips for various bidding strategies in Google Ads' Performance Max and Shopping campaigns.
What's in this article?

My three bidding strategies to boost your Performance Max or shopping campaigns

Manual CPC

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 couple of reasons.  

Manual  bidding gives me superior control and flexibiity in setting product bids. Bids could be set up from the ad group level all the way down to individual SKUs.

Setting up bidding for individual products in Google ads

Also, accounts that use more than one bidding type, 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

As we mentioned before, manual bidding can control bids and apply them granularly in a much better way than smart bidding.

Manual CPC bidding works only on standard shopping campaigns.  I use it on new accounts to determine the baseline click costs, and collect initial conversion data.

The process of determining a baseline bid level

I start with low bids and gradually work my way up to understand how I can bring more revenue without overpaying.

I also use manual bidding when conversions are too few for the effective smart bidding performance.

Switching to manual bidding to "reset" smart bidding

Sometimes I temporarily switch from smart bidding to manual in order to “unstuck” smart bidding.

Smart bidding has the tendency to sometimes neglect certain products.

The trick or temporarily switching to manual and back to smart, will force the alrorithm to treat all products evenly again.

Why I don't use Enhanced CPC bidding

Manual CPC bidding sen be set up in three ways

Enhanced CPC is Google’s first automated bidding strategy. It’s been around for many years.

Once maximum CPC is set up, actual bids will be adjusted up or down depending on how likely the bid gets a conversion. 

Being Google’s first take at automated bidding, eCPC 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.

Maximize Conversion Value

Maximize Conversion Value is available only on Perfomrance Max campaigns

The Maximize Conversion Value bidding strategy will help you get the highest conversion value within your budget.

How to determine daily budget

I determine the daily budget as the monthly spending goal divided by 30.4.
This strategy works only in Performance max campaigns.
I use this strategy in the campaigns with less than 50 monthly conversons.

Max Conversion Value with tROAS / tROAS

The Max Conversion Value with tROAS/tRoaS bidding strategy works on Pmax and shopping campaigns

tROAS is the most versatile, and the most powerful bidding strategy.

It works on standard and Performance max campaigns, andtries 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 right target ROAS value

To choose the right ROAS target, you need to measure the Conversion value / Cost ratio during the evaluation period. To determine the evaluation period, let look at the time phases in a campaign with smart bidding.

Time phases of a smart bidding campaign
  • Learning PeriodDays 1-14 on standard shopping (or up to 6 weeks for Pmax. For simplicity, I’ll be using the 14 days in calculations below).
    14 days are needed for the algorithm to ramp up. During the learning period, campaign can experience lower performance, higher spend, and swings in CPCs.
    Important: 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.

Determining ROAS of a Google Ads campaign

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%.

Continue monitoring the campaign even after setting tROAS. Don’t let it run wild. The campaign performance 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.

Tip 1. Boost revenue by increasing budget

The question of scaling (or increasing revenue) of shopping campaigns comes up a lot.

One obvious way to scale a campaign is by increasing budget.

Scaling a campaign 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.

Tip 2. Boost revenue by lowering target ROAS

Another way to scale a campaign is by lowering the target ROAS value.

Scaling a campaign by lowering the target ROAS

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.

Tip 3. Reduce spend by increasing target ROAS

After you increase your tROAS target, the bidding algorithm wll start serving ads more selectively, to the auctions that have higher probability of sale.

As the result, the spend will decrease.

Note that his method will be effective in the campaign with stable performance, meaning a campaign has been achieving the target ROAS for several weeks.

Change tROAS or budget in small increments, and not at the same time. For example, change it 10-20% every couple of days.

For example:
350% -> 380% -> 400% -> 430% -> 450% -> $100 -> $115 -> $130 -> $150 -> $180

Tip 3. Use Bid strategies

Fnding Bid strategies (formerly known Portfolio bid strategies) in the Google Ads navigation menu

Use Bid strategies to combine the campaigns with similar historical ROAS, but few conversions each. Your’ll get three benefits. 

Firstly, the resulting aggregation of the conversion data will make the algorithm perform more efficiently.

Bid strategy report

Secondly, viewing the results in the consolidated bid strategy report will simplify your account management.

Portfolio Bid Strategy settings in Google Ads

And finally, you even get a new control, usually unexistent in standard tROAS strategies. You will be able to set Minimum and Maximin bid limits.

One caveat of Bid strategies is that they don’t work on Performance Max campaigns yet.

Conclusion

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.

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