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Tips for Creating an Online Ad Bidding Strategy

Learning how to create and bid for ads online is a daunting process - which is why so many business owners rely on marketing companies to create their online ads for them. But it's also useful to peek behind the curtain and understand how to create an online ad bidding strategy. Today we'll cover the two most popular online ad platforms - Facebook and Google.

Facebook

There are a few different ad bidding strategies you can use on Facebook. You can find more details on Facebook's ad bidding guide, but let's walk through some of the most common strategies. As a reminder, Facebook relies on user interests to show ads. Instead of typing in a specific keyword, Facebook analyzes a user’s demographic information, their likes and their online activity to decide the relevant ads to show them. You'll be bidding on demographics when you use Facebook.

 

Lowest Cost (Auto-Bid)

This strategy requires the least amount of work on your part as it runs automatically. Facebook will automatically search for the lowest cost opportunities and run with them until your entire ad budget is spent. This is a good strategy to use if you want to spend your full ad budget and aren't sure where to start bidding. However the downside is that you have no control over your cost.

 

Bid Cap

In this strategy, you'll choose a max bid option. This allows you more control over your cost - you can choose not to spend your entire ad budget. However, because this process is manual you'll need to do more work choosing your max bid amount and monitoring costs.

 

Cost Cap

In this strategy, Facebook sets the bidding cost. As the advertiser, you set the maximum amount of money you're willing to spend. This strategy is best used when you want to keep the cost within a specific threshhold.

 

Target Cost

This strategy is similar to Cost Cap, but with more flexibility. Again, Facebook will set the bidding cost and you'll set the maximum amount of money you want to spend. However, with Target Cost you allow Facebook to go slightly under or slightly over your target spend. 

 

Value Optimization with Minimum Return on Ad Spend (ROAS)

Return on ad spend (ROAS) is a metric that measures your return on a specific ad campaign. It's calculated as Revenue Generated by Ads / Cost of Ads, which you then convert into a ratio. For example, if you made $10 for every $1 spent, the ROAS is 10:1. In this strategy, Facebook focuses on the bottom line to maintain your minimum ROAS that you define within Facebook. With this bidding strategy, you define your ideal ROAS and Facebook bids ads to try and reach that ROAS. 

 

Highest Value

This strategy also uses ROAS as the metric. In this strategy, Facebook uses your full budget to reach the highest ROAS possible. This strategy is ideal if you want to spend your full budget while getting the highest ROAS and you don't know what the idea minimum ROAS value would be.

 

Google

Like Facebook, Google has a few different bidding strategies. Google AdWords is a paid search platform, which means it relies on user intent to show ads. When a user types something into Google, ads appears above and below the search results that are related to that keyword. As an advertiser, you'll be bidding on specific keywords.

 

Manual Cost Per Click (CPC) Bidding

In this strategy, you'll set different bids manually for each ad group in your campaign or for individual keywords. This allows you to customize your budget by going after keywords at various costs. This also allows you more flexibility in your spending - for example, if a keyword begins to cost more you can increase/lower your budget for that specific keyword. However, this strategy is also very time-consuming.

Within Manual CPC, there's also Enhanced Cost Per Click (ECPC) bidding. This is a way to use machine learning in Google to automatically adjust your manual bids to optimize conversions. 

 

Smart/Automated Bidding

There are a few different smart or automated bidding strategies in Google. The advantage of these strategies is that Google does more of the research for you by using machine learning. The disadvantage is you have less control than a manual strategy and the machine learning may not be 100% accurate.

Target Cost Per Action (CPA) - This strategy optimizes for conversions by targeting a specific cost per action (CPA).

Target Return on Ad Spending (ROAS) - In the Facebook section, we covered Return on Ad Spending. Google also has an option for you to make ROAS your primary goal.

Maximize Conversions - This strategy is best if you want to optimize for conversions in general and spend your entire budget, instead of targeting a specific CPA.

Maximize Clicks: In this strategy, you set an average daily budget and the Google Ads system automatically manages your bids to bring you the most clicks possible within your budget. 

What specific ad bidding strategy you'll want to choose will depend on your platform, industry, budget and ultimate goal. Ultimately, it takes hours of research and careful consideration. 

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