Inside Google Ads podcast: Episode 50 - Bidding Targets
Which is better: Maximize Bid strategies in Google Ads, Target Bid strategies in Google Ads, or Manual Bidding?
This is the sixth bidding related episode of Inside Google Ads.
In case you're new here, you know that I will never advocate for Manual Bidding. It's 2025. But within our Smart Bidding strategies, we have a lot of different choices. Which one should you use? And are bid limits a good Goldilocks solution to keep CPCs in line?
I'm your host, Jyll Saskin Gales. I spent six years working for big brands at Google, and now I work for you.
This is Inside Google Ads, Episode 50: Bidding Targets.
Our first question comes from Annabel on TikTok and they ask, I notice I get more conversions without setting a CPA. Is it necessary to set one?
Short answer, no, it is not necessary to set a Target CPA.
Longer answer, let's unpack this. Why might you get more conversions without setting a Target CPA?
Let's remember how these bid strategies work.
Maximize Conversions prioritizes budget and then conversion volume. Spend my money to get conversions.
Target CPA prioritizes hitting your CPA target and then conversion volume. Here's the efficiency I need, so get me conversions that hit that.
If you're seeing more conversions when using Maximize Conversions versus using Target CPA, stick with Maximize Conversions. It's the default bid strategy for a reason.
The cause could be seasonality or fluctuations. If you only get two to three conversions a month, or even seven to 10 conversions a month, that's pretty low volume, so Target CPA may struggle with that.
The cause could be how you set your target. When you first set a Target CPA, you want to set your target at your actual 30-day CPA. And you want to have at least 30 conversions in the last 30 days, so you know that's a consistent CPA.
You also could have just not tested for long enough.
Whatever it is, if you set a Target CPA, you want to give it as long as it takes to drive 15 to 30 more conversions, ensure it's hitting your target, and then you can decide if you want to increase volume by moving your Target CPA up, decrease volume but get more efficient by moving your Target CPA down, or leave your Target CPA right where it is.
This is Episode 50 of the Inside Google Ads podcast. And if you're enjoying this show, I would appreciate it if you could take 10 seconds and leave me a rating wherever you're listening. And if you're listening on Apple Podcasts right now - yes, you! - I would especially appreciate it if you could write a review, maybe mention your favourite episode or something you've learned from this podcast that's been helpful to you. I really appreciate it. Thank you!
Our second question today comes from bzcapital on YouTube and they say, with a new campaign, would you still consider Max Conversions, or Max Conversions with tCPA, or using a portfolio bid strategy that would allow you to cap CPC? I'm finding in our niche some of the CPCs are very high. Welcome to the club, bzcapital. I'm trying to get some of my new campaigns to 30 in 30 as fast as possible with add to carts. Love that, micro-conversions. And what would your budget be on a new campaign budget using Max Conversions? Great info as always, thank you.
We have a few questions in this question and we're going to answer all of them.
First, with a new campaign, would you use Maximize Conversions or Target CPA? Remember, if you do Maximize Conversions and add an optional CPA, that's the same as choosing the Target CPA bid strategy directly.
Second, would you use a portfolio bid strategy so that you can put a maximum bid limit on your CPCs?
And third, what budget would you use on a new campaign using Max Conversions?
I've said this before on the podcast, I generally start new campaigns on Maximize Conversions. Episode 15 is actually all about Maximize Conversions bidding, if you missed that one.
I would not start a new campaign on Target CPA because you don't yet know what the CPA of your campaign would be, so how could you set an appropriate CPA?
The only exception is if my new campaign isn't really new. Like maybe I have a PMax campaign with three asset groups, and I decide to split one asset group out into its own campaign to give it a dedicated budget. Okay, so in that instance, I know what the CPA has been, so I could start it on Target CPA in a brand new campaign. However, I would probably give it a 10% to 15% looser target to start. So let's say this asset group had been achieving a CPA of $40 within the existing PMax campaign. When I create a new campaign with this asset group, I might give it a target CPA of like $45 just to give it some wiggle room as this new campaign learns.
Next, would I use a portfolio bid strategy in order to put bid limits in? This is a workaround you can use a way to set maximum CPCs even when you're using Smart Bidding. And no, I would not do this.
Here's a hill I will die on. Bid limits defeat the purpose of Smart Bidding. Smart Bidding's purpose is to optimize for your business goal. The cost of your CPCs has no relation to your business goal.
I'm going to tell you a quick story about this, which will help illustrate why I feel so strongly about not having bid limits. I started working with a new coaching client a few months ago. They run an agency that does website development and SEO, and they had outsourced their ads management to a white label freelancer.
Well, the agency owner reached out to me and hired me for coaching because their Google Ads were tanking and they decided they wanted to learn how to manage this themselves. There was one client especially, in the home services space, that was really unhappy.
We looked at the Google Ads account. Spend had been flat for months, spending the same amount, but conversion volume was dropping, dropping, dropping. When we looked at this, in the last 30 days, they had gotten 6 conversions, 6 leads. Average CPC was $2 and the CPA was $120. (We're going to come back to that.) The bid strategy was Maximize Conversions with bid limits. I think the limit was like $3, maybe $4. It was low, so that's why the average CPC was $2.
So I walked them through setting up new campaigns. We used Maximize Conversions still, but no bid limits. The first few days the new campaigns were live, the average CPC was, wait for it… $28 CPCs. I know! But the campaign had already gotten 3 conversions in just four days, and the CPA was $108.
So let's compare again:
Old structure, $2 CPCs with bid limits, $120 CPA, low conversion volume.
New structure in just the first four days, $28 CPCs but $108 CPA and high conversion volume.
And things got better from there. I checked in with this client again after the new campaigns had been live for about two weeks, so not even a full 30 days yet. Here's how the new campaigns were doing at that time.
Remember, old structure, $2 CPCs with bid limits, $120 CPA, 6 conversions in 30 days.
New structure after just 14 days, $10 CPCs, $68 CPA, 24 conversions.
That's four times as many conversions, in half the time, for half the CPA - even though the CPCs were five times higher!
Why? High quality clicks cost more. They just do. If there's a really valuable customer searching for a really valuable keyword, you are not the only person who wants to show that ad. And with bid limits in place, you are going to lose that auction every time and be left over with the garbage traffic nobody else wants.
This is my picture perfect case study, that I will be talking about for years to come, about why I don't use bid limits.
Now, are there exceptions to every rule? Of course, but my general guidance for you and for me is not to use bid limits unless there's a really, really, really good reason to do so, and practically never put them on a brand new campaign or you are just shooting yourself in the foot before running a race.
Okay, off the soapbox for the last part of the question. What budget would I use with Maximize Conversions on a new campaign?
The answer is enough to get me at least one conversion per day.
Let's back that out. You need to know two things to set your budget. You need to know your expected cost per click and your expected conversion rate.
Expected CPC we can see from Keyword Planner. You can check out Episode 7 and Episode 8 of this podcast for more on that. Episode 7 is about budgets and Episode 8 is about Keyword Planner.
For expected conversion rate, we can either use benchmarks from other existing campaigns in the account, or we can look at our conversion rate from other sources using Google Analytics. Remember, this is called a “Key Session Event Rate” or something. It's not called conversion rate. For example, Google Ads traffic will likely have a lower conversion rate than direct traffic, but a higher conversion rate than organic social media traffic. That should help you find a ballpark of what kind of conversion rate you might expect.
So, let's say our expected CPC is $5 and our expected conversion rate is 2%. This 2% conversion rate means we'll need 50 clicks in order to get 1 conversion, on average. So, 50 clicks a day, 1 conversion a day. That is 50 clicks times $5 CPCs is $250, so we'll need a daily budget of $250. Phew!
If you've got questions for me, like these listeners, and you don't want to wait every week to see if I've answered your question on the podcast, you should join my Inside Google Ads course. One of the benefits of the course is that you can ask me questions and I'll answer them for you, either live at our Monthly Meet or at any time throughout the month. Just drop a comment on any of the more than 100 in-platform lessons and I'll get back to you within a few days. Stop guessing and start getting expert advice with your Google Ads. Join Inside Google Ads today at learn.jyll.ca, that's J-Y-L-L.ca, or follow the link in the episode description.
Our final question today comes from 0he on Instagram. I was a little triggered by this one, I will admit, but here's what they said. I wonder if tROAS 1% works like Max Conversion Value strategy or not. I mean, if it is loose enough, it should be. At the same time, I can make use of Max CPC through Portfolio strategy.
I responded and basically said, “No, please do not do this.” But they came back and they said tROAS must be the same as Max Conversion Value if my ROAS is loose because… they went through the whole logic.
Okay. No. Setting a Target ROAS of 1% tells Google that for every $100 you spend on ads, you want $1 in revenue.
Setting a Maximize Conversion Value Bid strategy tells Google to spend your money and get you as much revenue as possible.
These are not the same thing. They are not even in the ballpark of the same thing. Do not set a Target ROAS of 1%!
Let's use a practical example to illustrate why. Let's say your campaign has a daily budget of $100. You sell widgets. When you sell a widget, you get $200 in revenue.
Under the scenario presented by this commenter, with a Target ROAS of 1%, what would happen? Well, over the course of a month, he would spend $3,000 (with a $100 budget for 30 days). The return you're telling Google you need on that is 1%, so $30. And your widgets sell for $200, so Google would not even need to get you a single conversion in order to pat itself on the back and say, “Job well done.” In fact, if Google got you just one purchase every six months, Google would be achieving its goal of a 1% ROAS. That would be $20,000 in ad spend for $200 in revenue. That's a ROAS of 1% in this scenario. So you'd be telling Google, “For every $20,000 I spend, I want one $200 sale.” I can't think of anyone who would ever want to tell Google that.
Now contrast that with the Maximize Conversion Value Bid strategy. “Here's my $3,000 a month, get me as much revenue as possible.” Google will work towards getting you purchases, getting people to buy your widgets, but also on getting people to buy more widgets or more expensive widgets. If you sold one widget that month, that would be a 7% ROAS. Already seven times higher than that 1% scenario. Maybe you sell 100 widgets a month, which would be a 6.6 ROAS, 667%. The point is, the system actually won't be looking at ROAS at all. It will only focus on getting you as much revenue as possible.
As I mentioned in my last answer, bid limits have no place here. Your goal is either revenue or it's ROAS, but I promise your goal is not 1% ROAS, so do not tell Google that it is.
There are four Smart Bidding strategies in Google Ads, and in most scenarios, you're going to want to use one of them: Maximize Conversions, Maximize Conversion Value, Target CPA, Target ROAS. Maximize Strategies are good when you launch a new campaign and need to build up data. Target strategies are good when you're achieving your goals and want to scale. Just remember to set realistic targets and please, please, please do not set bid limits.
Today's Insider Challenge is this. You're running a Search campaign that's on a Maximize Conversions Bid strategy. It drives 15 to 20 conversions per month at a CPA that ranges between $40 to $60, depending on when you look at it. Do you switch to a Target CPA strategy? Why or why not? What would you consider?
The beauty of the Insider Challenge is there's no right or wrong answer, just an opportunity to stretch your brain on real life Google Ads problem solving.
Last Episode's Challenge was this. What's one way you're going to use AI this year to help you manage Google Ads more effectively?
My answer to this, when I thought about it, is I haven't used AI in any of my Google Ads audits. And I actually saw Brooke Osmundson speak about this at the MnSearch Conference in June. She shared a lot of interesting ideas that I just haven't put into practice yet.
I wouldn't outsource any of my recommendations to AI, but some of the analysis could definitely save me time. For example, I download a Keyword Report when I'm auditing an account and I create pivot tables on pivot tables to look at Match Types and Quality Score. Gemini could probably do that for me and work on it in the background while I move on to other pieces of the account.
And maybe for ad text, I will usually comment on the ad text, like whether I think they need to work on their copy or not, but I usually don't provide specific ad copy suggestions as part of an audit. I would on a coaching call, but not on an audit, since I don't know what I don't know about their business. I'm just auditing. But maybe Gemini could analyze the ad text from the perspective of the target audience and make some suggestions. That would be cool.
So that's what I'm thinking about. Not outsourcing my thinking or analysis or recommendations to AI, but what are some ways I could use AI to support my analysis and help me deliver even more value within an audit.
What about you? What's one way you want to use AI to help you manage Google Ads more effectively this year?
I'm Jyll Saskin Gales and I'll see you next time Inside Google Ads.