Following the announcement in April this year, Google is making changes for automated bidding strategies. This is to make bidding strategies more transparent.
The existing bidding strategies Target Cost Per Acquisition (Target CPA) and Target Return on Ad Spend (Target ROAS) will be able to continue to be used, but they will also be part of the updated bidding strategies Maximize Conversions and Maximize Conversion Value. This is similar to how it already works for Smart Shopping campaigns, where the Maximize Conversions bidding strategy can be used with Target ROAS.
To better illustrate how bidding strategies change, Google has prepared the following table:
| Performance goal | Current Bid Strategy | Updated Bid Strategy |
|---|---|---|
| Maximize conversions within a set budget | Maximize conversions | Maximize conversions • Optional target CPA |
| Maximize conversions to a target CPA | Target CPA | |
| Maximize conversion value within a set budget | Maximize conversion value | Maximize conversion value • Optional target ROAS |
| Maximize conversions value to a target ROAS | Target ROAS |
Source: Google
By the end of 2021, only the following bidding strategies will be selectable when creating campaigns:
- Maximize conversions (with optional CPA target)
- Maximize conversion Value (with optional ROAS target)
When setting optional targets, smart bidding will perform optimization with respect to the given targets, i.e. to a specified target cost per acquisition (target CPA) or to a specified return on ad investment (target ROAS).
If you do not set targets in the given bidding strategies (i.e. in the bidding strategies Maximize conversions and Maximize conversion value), they will work as before, i.e. maximize the number of conversions (regardless of the cost per 1 conversion) or maximize the number of conversions (regardless of the value of conversions).
How will the updated bidding strategies work?
If you use the new goals in the updated bidding strategies Maximize Conversions and Maximize Value of Conversions, respectively, the bidding strategies will work as follows:
Maximize conversions using the target price per acquisition
- Google ads will automatically set bids to get as many conversions as possible at the set cost per acquisition (CPA)
- Campaigns will be optimized to achieve the given goal on average for each conversion, so some conversions may have a lower cost per acquisition and some may have a higher cost per acquisition than the target amount
- Example: if we set a target price per acquisition e.g. €10, the cost of acquiring conversions can be e.g. €8, €12, €10, €11, €9, so on average €10 for 1 order
Maximising the value of conversions by targeting the return on advertising spend
- Google Ads will automatically adjust bids to achieve the highest possible conversion value at the set target amount and also the target return on ad spend (ROAS)
- Therefore, some conversions may have a higher or lower return than the target return (target ROAS)
- The target ROAS represents the average target conversion value you want to get for every euro spent as credit in Google Ads, so e.g. if you spend €100 and you want to have orders worth €500, the target ROAS is 500%
At the beginning of 2022, there will also be an automatic change, i.e. a change from the older bidding strategies to the new ones, as follows:
- Bidding strategy Target cost per acquisition (target CPA) => will automatically change to bidding strategy Maximize conversions
- Bidding strategy Target return on ad spend (target ROAS) => automatically changes to bidding strategy Maximize conversion value
Recommendation: when you run new BlueWinston campaigns, I would recommend starting with a manual bidding strategy and then using either the Maximize Conversions or Maximize Conversion Value bidding strategy. And once the goals (target CPA, target ROAS) are available, then add a specific goal to your chosen bidding strategy as well.
If you already have some BlueWinston campaigns running for a longer period of time, we recommend switching to the bidding strategies Maximize conversions or Maximize conversion value, and when possible, add goals to them as well.
