No matter how unique or special your product is, in the vast world of ecommerce, competition is fierce and relying solely on SEO is not enough. That's why, if you want to stand out from the crowd and compete with bigger brands, it's crucial that you understand how the Google Ads algorithm works.

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How does advertising work?

In the world of paid ads, whether you're advertising on some social network like Facebook and Instagram or on Google Ads, advertising is paid for through an auction system, bidding for the best position on each platform. If you win the bidding, then you pay the agreed amount for clicks, views, likes or impressions on that platform. Most platforms recommend you a bidding option, but the truth is that it does not always work, so you should know in depth how this system works and you choose the one that will bring you the highest conversions.

Here we will focus on Google Ads, however, this information will also be useful if you advertise on other platforms such as Meta.

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The ABC of Google Ads Bids

The type of ad you select will depend on your budget and your advertising goals as some ads are more expensive than others. However, certain ads are more suitable for certain advertising objectives.

If you are just starting out and don't have much information about your audience, you may have selected Cost-per-click (CPC). Here, as its name says, you control the budget by setting the maximum cost per click for your ads. This is a useful strategy in the beginning when Google doesn't yet have a lot of data about your target audience.

If you already have experience and conversion data, Smart Bidding is your next step. Google Ads automatically adjusts bids based on the likelihood of getting clicks or conversions. This is where machine learning comes into play, considering factors such as location, time of day, device, language and more.

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Bidding Strategies: Choose Yours!

There are 3 factors to keep in mind when selecting your bidding strategy: your target, your budget and how many conversion figures you have. Here I will explain the types of bidding with your objective in mind:

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If you are looking to increase the value of your business, there are two options:

• Maximize conversion value, this strategy adapts bids for each bid. It is an approach that adapts bids for each bid. Google Ads automatically adjusts bids to maximize the probability of getting valuable conversions. This is achieved by analyzing past conversion data and optimizing in real time.
• Target ROAS, this is one of the best strategies, as it determines if a search is likely to generate a high value conversion, if so, it will bid high on that search. With this method, it is essential to have past conversion data and understand your target Return on Advertising Spend (ROAS).

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Now, if your goal is to increase sales or leads, I recommend you to choose one of these three:

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• Target CPA, for this one you should define the maximum cost you would like to pay per conversion and Google Ads will adjust bids to meet this limit, helping you to control costs and improve profitability. This is a more advanced strategy, for which you must have more data. I recommend you to have more than 60 conversions in the last month for this strategy to be effective.
• Maximize conversions, focus on getting as many conversions as possible within your allocated budget. The Google Ads system will automatically adjust bids to maximize efficiency and achieve the highest number of conversions. The risk with this strategy is if you have a very high budget, as you will spend it all and can sometimes spend too much for a single click.
• Maximize conversion value, this one, unlike the previous one, will focus not only on getting the most conversions, but will optimize bids to target your ads to audiences that have historically generated a higher conversion value. This is one of the most advanced strategies and the one you need the most data for, but the one that will give you the best conversions.

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And finally, if your goal is to increase website visitors, I recommend choosing the Maximize clicks strategy, which aims to get as many clicks as possible, within your budget. If you choose this strategy, I recommend setting a maximum Cost Per Click (CPC) helps to avoid overspending while maximizing interactions with your website.

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(In this table I show you which strategies spend your entire budget and which do not).

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Final Tips for Success

Choosing the right strategy can be challenging, but don't worry. Identify your objective first and then match it with the strategy that fits. Marketing decision making often involves trial and error, so be patient. As you accumulate more conversion data, you'll optimize your strategies.

Now that you know the various bidding strategies, choose the one that will propel your business to success! Follow us on our social media for more digital marketing tips. And, if you're ready to take your brand to the next level, contact us and let Felix Media take care of elevating your ecommerce.

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If you want more information on this topic, here are some videos that can help you:

• More about bidding strategies: https://youtu.be/iGdlxysq5Go