Understanding search engine marketing (SEM) bid strategies

Without a bidding strategy your SEM campaign is likely to fail and take all your money with it. Be a smart marketer. Follow our guide to learn how.
9 minute read
TEMITOPE SODIQ @amiablewriter
Technical Co-pilot
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Every sucessful SEM campaign starts with a cunning bid strategy

Do you know that the success of your search engine marketing (SEM) campaign depends on the bid strategies you adopt? Are you also aware that using the right keyword bid strategies for your digital marketing ads can significantly save your time, reduce your marketing costs and drive more conversions for your brand? Read on to learn how SEM bid strategies can grow your business revenues. 

Know your campaign goals

All digital marketing plans begin with a campaign goal. Before you pick a bidding strategy to use for SEM, you need to figure out what your campaign goals are. Are your campaign objectives to get clicks, views, conversions, or impressions? Is your campaign goal to set your cost-per-click bid limit manually or automatically? Make sure you put your campaign goals in writing so that you won’t forget easily. Remember. Each campaign goal you choose is suited for a specific bidding strategy. 

Identify your keywords and keyword bid price

After you’ve written down your SEM goal, you need to find out all the keywords that can help you to boost your ad performance. You also need to research the bid price of the keywords you selected for your ads so that you won’t spend more than your budget. To get your keyword ideas and keyword bid price, follow these steps:

Step 1: Click here to sign in to your Google Ads account.

Search Engine Marketing (SEM) Bid Strategies

Step 2: Click the “TOOLS & SETTINGS” icon, which is located at the upper right corner of your screen. Under “PLANNING” (see Column 1), click “Keyword Planner”. 

Search Engine Marketing (SEM) Bid Strategies

Step 3: Click “Discover new keywords” to get keyword ideas.

Search Engine Marketing (SEM) Bid Strategies

Step 4: Enter any keyword related to your business. Don’t worry. Google Ads will provide more keyword ideas associated with your business for you. Let’s assume you sell beauty products like perfume. Type “perfume” and click “GET RESULTS”.

Search Engine Marketing (SEM) Bid Strategies

Step 5: As you can see below, Google Ads will suggest other keyword ideas for you. Check the table below to see the average search of each keyword (see Column 2), how competitive every keyword is (see Column 3), the minimum bid price for each keyword (see Column 5), and the maximum bid price for each keyword (see Column 6). 

Search Engine Marketing (SEM) Bid Strategies

Armed with this data, you can select the right keywords for your ads. If your campaign budget is low, it is advisable to select keywords with medium competition. But if you have a fat budget, you can pick a potpourri of keywords with low, medium, and high competition.

Estimate your campaign budget with your keyword ideas

To estimate your keyword budget and get a vivid picture of how each keyword will drive conversions, go back to Step 3 and click “Get search volume and forecast”. 

Search Engine Marketing (SEM) Bid Strategies

Step 6: Enter the keywords you want to forecast and click “GET STARTED”. Also, make sure you separate your keywords with a comma to get accurate results. Let’s use “perfume” as our keyword again. 

Search Engine Marketing (SEM) Bid Strategies

Immediately you click “GET STARTED”, Google Ads will show your estimated clicks, impressions, costs, cost per click (CTR), and average position. Don’t forget. This information is just an estimate. You may not spend up to the estimated cost ($280). From our experience, you are likely to spend about 90% of the estimated cost, which is about $252, if your ads rank on the top results page of Google. 

Search Engine Marketing (SEM) Bid Strategies

SEM bidding strategies

Now that you have an idea of your campaign goals, keywords and keyword price, the next step is to choose a bidding strategy for your ads. Have this in mind. If you don’t select the right bidding strategy, you will not get the most out of your campaign budget. This also means you will be losing money and not be able to achieve your SEM goals on time. 

That said. SEM bid strategies on search engine platforms come in two forms: manual and automated bidding strategies. In this guide, we will use Google Ads to explain the different bid strategies you can use for SEM. After all, you are likely to use Google Ads for your SEM given that Google has more than 90% of the search engine market share

Manual bidding strategy

This strategy is also called manual CPC bidding on Google Ads. A manual CPC bidding strategy gives you the power to set the maximum bidding price for your ads. This means you can directly tell Google Ads how much you want to be charged for when web visitors click on your ad. With this bid strategy, you can also pick how much you are willing to pay to be ranked higher for individual keywords related to your ads. 

Search Engine Marketing (SEM) Bid Strategies

Pros and cons of manual bidding strategy

A manual bidding strategy is advantageous for your campaign if you don’t want Google Ads to charge you more than your campaign budget. You should also use this bid strategy if you want to track your CPC bid limit. On the downside, a manual CPC bidding strategy is stressful and time-consuming. You will be left with no choice but to spend copious amounts of time, adjusting your bid price from time to time so that you don’t overspend your budget or set a bid budget that will not drive conversions for your campaign. 

Automated bidding strategy

Tired of guessing the right bidding price that will optimize your ad performance? You can never go wrong with an automated bidding strategy. This strategy is designed to help you to automatically set and adjust your bid price every auction time, thus achieving your SEM goals. If the bid price you selected for a keyword is too low, Google Ads will automatically adjust it for you based on your budget so that you can achieve your SEM goals. But if your keyword bid price is too high, Google will optimize it for you based on your budget to reduce costs. This adjustment is not magic. Google Ads will use your historical conversion data to make the automatic adjustment for you. 

Search Engine Marketing (SEM) Bid Strategies

Pros and cons of automated bidding strategy

This smart bidding strategy will save you time. Here is why. Google ranks ads mainly based on the bid price, which fluctuates based on the time of the day, location, device, language, operating system, etc. For instance, a keyword like “hire freelancer” may cost $1 to appear at the top of the results page in the morning. Due to competition, Google Ads can charge up to $3 for the same keyword to appear at the top of the results page in the evening. With an automated CPC bidding strategy, you don’t need to adjust your bid price manually any time the bid price of the keyword you selected changes. Google will do the adjustment for you, freeing you more time to focus on your business. 

However, automated bidding strategy has two major drawbacks. One, you have no control over how Google Ads manages your campaign budget. Two, Google artificial intelligence may not understand your business, thereby making the wrong CPC decision for your campaign. 

All in all, we recommend that you should give automated bidding a try. This bidding strategy has worked for many businesses out there, and it may work for your brand too. 

Types of automated bid strategies

There are currently six types of automated bid strategies you can leverage to achieve your SEM goals. They include the following:

  1. Target CPA (cost per acquisition)

  2. Target ROAS (return on ad spend)

  3. Maximize clicks

  4. Maximize conversions

  5. Maximize conversion value

  6. Target impression share

Target CPA

If your campaign goals are to drive conversions, leads and sales, target CPA is the right bidding strategy for your business. With this bid strategy, Google Ads will automatically set your bid price to drive as many clicks as possible for your ads. For instance, if you set your target CPA to be $5, Google Ads will automatically adjust your bid price between $0-$5 based on current competition, so that your ads can be eligible to appear on its search engine and other Google display networks.

Search Engine Marketing (SEM) Bid Strategies

Wondering how Google Ads makes this bidding-price decision for your campaign? The answer is simple. By relying on your account’s historical conversion data, Google AI can automatically decide when to decrease or increase your bid price during every ad auction in order to boost your ad performance. However, Google Ads will not allow you to use this bidding strategy if you have don’t up to 15 conversions in the last 30 days. To meet this conversion requirement, it is advisable to start your campaign first with a manual CPC bid strategy. 

Target ROAS

Like target CPA, target ROAS is ideal for driving conversions. If you have a product you want to sell online, target ROAS bidding will help you to set the right bid price for your ads automatically. Before you can use this bidding strategy, you need to know how to calculate your target return on ads spend (ROAS). 

Mathematically, ROAS = (amount of sales revenue/amount of ad spend) * 100%. So, if you are making a revenue of $4 for each $1 you spend on ads, your ROAS is 400%. After you’ve set your target ROAS, Google will automatically set your maximum bid price to maximize your conversions and reach your target ROAS of 400%.

Search Engine Marketing (SEM) Bid Strategies

Target ROAS also works like target CPA. Google AI uses your historical conversion data to set the maximum CPC bids that can help you achieve your target ROAS. To use this strategy, you need at least 15 conversions in the last 30 days.

Maximize clicks

If you want many potential users to visit your website, look no further than adopting a maximize-click bid strategy. This automated bidding strategy is designed to help you get as many clicks as possible for your ads. 

This smart bidding strategy is also beneficial for your business in that it comes with “set a maximum cost per click bid limit.” This option gives you the power to cap the maximum amount you want to spend per click, thereby giving you more control over your campaign budget. You can pick this option if you don’t want to wake up in the night feeling disappointed that Google Ads has mismanaged your campaign budget. However, choosing this option comes with a heavy price: your number of clicks will be limited. 

Search Engine Marketing (SEM) Bid Strategies

Maximize conversions

The maximize-conversion bid strategy and maximize-click bid strategy are identical in that Google Ads will automatically set your bid price to achieve your campaign goal. The major difference between these smart bid strategies is that maximize conversions is created to optimize your conversions, while the maximize clicks is designed to optimize your clicks. 

There is another thing you need to be aware of. Unlike maximize clicks bidding, maximize conversions bidding does not allow you to cap your CPC bid limit. As you can see below, the option is not even available on Google Ads. 

Search Engine Marketing (SEM) Bid Strategies

So, if you select a maximize-conversion bid strategy, you will not be able to cap the cost you will spend per click. Nonetheless, maximize-conversion bidding is a good option on your fingertips if you want to get the most conversions, leads, and sales for your campaign. 

Maximize conversion value

Introduced by Google in 2019, maximize-conversion-value bidding is more specific than maximize-conversion bidding. With maximize-conversion-value bidding, you can specify how Google Ads should maximize your conversion value, which may be your profit margins or sales revenues. 

Search Engine Marketing (SEM) Bid Strategies

Target impression share

Do you want your ad to appear at the top of the search engine result page or at a specific search location on Google results pages? If so, target impression share bidding is what you need. This smart bidding strategy is strictly designed for Google search engines. In other words, you can’t use it on YouTube, Google Play or other search networks. 

What’s more, this automated bid strategy allows you to set your maximum bid limit so that you have control over your budget. On top of that, you have the option of “percentage (%) impression share to target”, which represents how often you want Google to rank your ads at the results page area where you want your ad to appear. For instance, if you choose “top of the page results page” and 80% “percentage (%) impression share to target”, Google Ads will set your CPC so that your ads can appear at the top of the results page 80% of the time when web visitors search for keywords related to your ads.

A screenshot of a cell phone

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Conclusion

The world is moving towards a digital economy. More than 2 billion people now buy goods and services on the Internet annually. You can attract these digital buyers to your business with SEM bid strategies. What are you waiting for? Try one of these bid strategies today and take your brand to the next level. 

A screenshot of a cell phone

Description automatically generatedNumber of digital buyers worldwide from 2014 to 2021 - Source: statista.com

 

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