Introduction to portfolio bidding strategies
If you’re in the business of managing Google Ads campaigns, you know how useful and powerful automated bidding strategies are Smart Bidding, through which Google’s powerful algorithm independently manages the bidding (bid) in advertising auctions, with the aim of optimizing the number or value of conversions of our campaigns, making our work easier.
However, Smart Bidding is not always perfect. Indeed, an unfortunate situation that can occur is to lead us to spend an inordinate amount of money on a single click. In fact, giving total freedom to the algorithm on our bidding strategy will lead Google to make exaggerated bids on a click when the same algorithm believes that there is a high chance of conversion on that click itself (a conversion that does not always then take place).
To better understand this situation, look at the following example:
We note that the average CPC of this Search campaign is 0.28€. However, in some cases Google’s algorithm on a single click charged us as much as 11.11€(40x the value of the average CPC of the campaign), or 8€(28.5x times the value of the average CPC of the campaign). Extremely high values compared to the average CPC which, by not then leading to tracked conversions, result in a real waste of budget.
And this is nothing. In some cases a click charged by Google resulted in more than 50x times the value of the average CPC of the campaign.
Small note: paying more for a click than its average cost value is not always a bad thing. Often this happens when Google Ads recognizes a high likelihood of conversion on a given click. However, we do not feel it is fair to go and pay for a click 40 times its average cost value. Therefore, it becomes important to understand how to take action to avoid potential waste.
Fortunately, there is a technique (quite advanced and hidden in the platform) that allows us to keep tabs on the maximum CPCs paid in the auctions of our advertising campaigns on the Search network: portfolio bidding strategies with maximum CPC limits.
Let’s find out together what these are and how we can set them up within Google Ads accounts.
The Strategies Of Portfolio Offerings With Limitations Of Maximum CPC
Portfolio bidding strategies work in the same way as regular bidding strategies, except that with portfolio bidding strategies you can use them to group multiple campaigns together.
The portfolio bidding strategies currently available are as follows:
- CPA target
- ROAS target
- Maximize clicks
- Target Impression Share
- Maximizes conversions (with or without a tCPA)
- Maximizes the value of conversions (with or without a tROAS)
And now you may ask: What is the advantage of using portfolio bidding strategies over standard bidding strategies?
The advantage is to be able to go and set a maximum CPC limit for ROAS Target and CPA Target bidding strategies. The maximum CPC allows us to set a maximum cost per click beyond which the Smart Bidding algorithm should never go when bidding in auctions, thus dramatically reducing the budget waste seen above.
It is therefore a matter of limiting (but not too much) the autonomy of the algorithm, while exercising us advertisers more stringent control over cost per click.
Let’s see together what steps to follow in platform to apply this technique:
- Click on ‘ tools and settings ‘ in the top bar of Google Ads
- In the Shared Library section, Click on ‘ bidding strategies ‘
- Select ” Portfolio Strategies ” and click on the ” + ‘ to create a new bidding strategy by portfolio
- Choose your bidding strategy (target CPA or target ROAS)
- Select your target CPA or ROAS for your campaign(s)
- Select one or more Search campaigns where you want to apply the bidding strategy
- Click on ‘ advanced options ‘
- Enter a maximum bid limit, leaving the field for minimum bid blank instead.
- Click on ‘ save ‘
This is a rather advanced and useful technique, but at the same time very delicate as a mistake in setting the maximum CPC could lead to a drastic drop in the performance of your campaign.
Let’s see together what are the 3 most common mistakes you need to avoid when setting up a portfolio strategy with maximum CPC.
3 mistakes to avoid in maximum CPC portfolio bidding strategies
Mistake #1: Setting a maximum CPC too low
One mistake that should absolutely be avoided is setting a maximum CPC too low, which risks compromising campaign performance by not giving the algorithm room to maneuver, which will then have difficulty generating impressions and clicks.
Therefore, it is necessary not to limit the algorithm too much, while at the same time avoiding paying disproportionate amounts of money for a simple click. To do this, the ideal would be to set a maximum CPC that is 3-5 times (sometimes more) the current CPC of the campaign. In this way we do not limit the algorithm too much, which will have a good amount of leeway in auctions while avoiding excessive ”bidding” for a simple click.
Taking the above example again, if the average CPC of the campaign amounts to 0.28€ a good maximum CPC to set could be 1.4€ (0.28 x 5). This way we tell the algorithm not to spend more than 5 times the value of the average CPC for a single click. Setting a maximum CPC at or below the average CPC value risks reducing campaign performance. Consider this carefully when setting a maximum CPC in your portfolio bidding strategies.
Personally, I set a maximum CPC ranging from 3-5 times the value of the average CPC, or in some circumstances even more depending on particular cases.
Error #2: Setting a maximum CPC based on the CPC of the entire account
When setting your maximum CPC, you should not take as a reference point the overall average CPC of the entire account (especially if you have many different active campaigns), but you should always start with the average CPC of the campaign(s) that will be included in the portfolio bidding strategy.
If you rely on the average CPC of the entire account, you risk setting a CPC too low by making a mistake similar to the one seen in point #1.
Mistake #3: Not monitoring the set bidding strategy
For the purpose of ongoing campaign optimization, it becomes important to periodically review the performance of the bidding strategy set and make any changes and updates when necessary. If, for example, you notice a drop in impressions or clicks it might be worthwhile to update the maximum CPC, which may be too low.
While the maximum CPC gives us greater peace of mind about budget management, forgetting to monitor that strategy is the first step toward campaign failure.
Portfolio bidding strategies with maximum CPC are therefore a very advanced technique (and for that reason used only by a few experienced advertisers) that allows us to greatly reduce budget waste when we use Smart Bidding in our Search campaigns.
This allows us to better optimize the performance of campaigns and gain a competitive advantage over our competitors.
Always remember not to set a maximum CPC too low in your bidding strategies. Our goal is to avoid possible budget wastage without limiting Google’s algorithm too much, which remains our key ally.
Also remember to monitor the progress of the bidding strategies you set, optimizing as needed.
By setting up such a technique, you carry out important step for foolproof Google Ads campaigns. Only a few experienced advertisers know and apply such strategies. We at WebGas.net apply this and many others to our clients’ campaigns, often generating significant results.
If you are a business owner who wants to achieve major revenue goals with the help of online advertising channels, you need to rely on an experienced agency that knows all the secrets of such powerful yet complex platforms.
WebGas.net can help you with all of this. Contact us for a free initial consultation and find out how we can work together.