Google ads are a powerful partner to organic SEO. According to Wordstream, 65% of all clicks made by users who intend to make a purchase go to paid ads. So leaving such a large percentage of clicks on the table for your SaaS company is something we want to avoid. In this article, we do a deep dive into Google Ads bidding strategies for SaaS companies.
One of the biggest decisions to be made when starting up your own campaigns for Google Ads is which bidding strategy to select. Are automated bidding strategies effective vs manual bidding? Bid strategies such as manual CPC (Cost Per Click), enhanced manual CPC, target CPM (Cost Per Mille/Thousand), Maximise CPV (Cost Per View), maximise clicks, maximise conversions, maximise conversion value, maximise impression share, target CPA (Cost Per Acquisition) and target ROAS (Return On Ad Spend).
There’s a lot to choose from and making the wrong choice is one of the most common pitfalls leading to an account struggling to achieve profitability or even a clicks to site. This guide will run through each bidding strategy’s strengths and weaknesses for SaaS companies to help you drive sales and scale your business with Google Ads!
All the below is based on real-world testing over millions in ad spend through the agency I run, Snowball Creations. I’ve seen first-hand how each bidding strategy plays out in Google Ads campaigns for SaaS businesses.
Table of Contents
- What Is Your Goal?
- What Is a Bidding Strategy?
- Manual Bidding Strategies vs Automated Bidding Strategies With Google Ads
- Conclusion
What Is Your Goal?
Before reading on, the most important factor to consider is what is your goal? Or in Google Ads terms, what is your campaign objective?
Some SaaS companies may be for example pre-launch and so either looking to build brand awareness, have customers sign up to their email list or follow them on social media. These goals suit particular campaign types and bidding strategies.
Or if you’re a SaaS business further along in your journey with a live product you may instead be fully focused on conversions into a free trial or other sign up and so achieve as low of a customer acquisition cost as possible.
This can be further split up into a business in this stage that’s either just started with Google Ads and so no has no data vs a business that’s been running Google Ads with conversion tracking set up correctly for quite a while, and so a large amount of conversion data.
Ask yourself what it is you’re looking to achieve from your Google Ads marketing campaigns and then based on that goal, the below information should guide you on which bidding strategy is right for each search campaign, video campaign or display advertising campaign you might be running.
Are There Any Other Paid Channels That Might Be a Better Choice?
Google Ads is often the foundational channel we recommend to anyone.
However, there are a great number of platforms out there that each has its own benefits for any SaaS company.
So we’ve put together a simple quiz that helps you to discover the perfect marketing mix for your business.
What Is a Bidding Strategy?
Google describes a bidding strategy as:
A bid strategy that automatically sets bids for your ads based on that ad’s likelihood to result in a click or conversion. Each type of automated bid strategy is designed to help you achieve a specific goal for your business.
To put it in a more human way, it’s the approach that Google will take when it comes to bidding in the auction of Google ads. Each impression that’s available has 3 bidders and how those bidders compete is based around your bidding strategy. Importantly, not just on that one auction but across the total available auctions you have set up within your campaign for the total budget you’ve set.
Using maximise clicks? Google will figure out the cheapest clicks possible to achieve the largest number possible for your budget and keywords you’ve set. Have maximise conversions? Google will look at which keywords convert and invest more heavily in those over others.
Engagement to Conversions
It’s helpful to look at the various bidding strategies as a spectrum. On one end you are focused on engagement like video views, impressions, clicks etc. and on the other end you are focused on the end goal of conversions into sales or leads.
Engagement is easy. Easy is cheap. Engagement is also less valuable though by nature. So use engagement-focused smart bidding strategies in Google Ads when you haven’t got data or are trying to build up data. This goes for other paid channels too.
Conversion is hard. Hard is expensive. Though Conversions are where all the value lies. So use conversion-focused smart bidding strategies in Google Ads as soon as there is enough data to work with. They work best the majority of the time but only when there are enough conversions through the system.
Also, consider hiring a professional copywriter to write ads that convert powerfully.
Manual Bidding Strategies vs Automated Bidding Strategies With Google Ads
Manual bidding strategies
Manual bidding in Google Ads like manual CPC, manual enhanced CPC or others is where you take complete control on how much each keyword is allowed to bid.
Some argue that they are just always the best path forward. Generally speaking, automated bidding strategies can often win out nowadays.
The two main use cases we have for manual CPC bidding is either for brand campaigns where we know we have extremely high quality scores and so can bid low and the value of the traffic is less high as it’s users who already know about the brand, or explorer campaigns where we may take one main keyword and set it as broad match but within its own campaign and set to a low CPC. This allows us to find new search terms but in a controlled safe way.
The other moment manual bidding can help is when things just aren’t working. Automated bid strategies can get stuck up against a rock, like one of those automated carpet cleaning robots that can’t figure its way around a chair leg.
Automated bidding strategies
Automated bidding strategies in Google Ads like maximize clicks, maximize conversions, maximise ROAS, or target CPA is where you give a smarter objective to Google and they vary your bids with a broader lense of the total goal across the whole campaign with its keywords and budget.
Their main strength is that they allow you to bid more efficiently and often more accurately to that goal as Google understands what you’re looking for.
The main weakness is that you give up control. Beyond having a maximum CPC and setting the budget as you like it is really left up to Google how much you bid across each keyword.
A common scenario with a new client might be that we prime the account with maximize clicks to just try to build up click data and then move over to a conversions centred strategy once enough conversions have come in.
1. Target Impression Share Bidding Strategy
Google’s definition
Target impression share is an automated bidding strategy that sets bids with the goal of showing your ad on the absolute top of the page, on the top of the page or anywhere on the page of Google search results.
Our definition
Here you are trying to show up on as large a percentage of impressions as possible. So of the 100 people that search for your keyword today, this strategy tries to get you to show up for as large a percentage of that 100 as possible.
Strengths
In some cases, it can be useful to prime an account to get more clicks through if you’re having trouble getting in front of users or if you’re purely trying to run ads as a brand awareness campaign.
Weaknesses
Really impressions is almost never the goal. Clicks to your website at least is really the highest up the funnel that you would want to go.
We haven’t ever used target impression share as a strategy for any client as there is so little value in just an impression.
2. CPM / Target CPM / vCPM Bidding Strategy
Google’s definition
CPM (Cost per mile)
With this bid strategy, you’ll pay based on the number of impressions (times your ads are shown) that you receive on YouTube or the Google Display Network.
Target CPM (Target Cost per mile)
A bidding strategy where you set an average for how much you’re willing to pay for every thousand impressions. It optimises bids to maximise your campaign’s unique reach. With tCPM, you can keep your campaign’s average CPM lower or equal to the target that you set (although the cost of impressions may vary).
Our definition
So this is a way of bidding based on setting a specific goal in mind on how much you’re willing to pay for 1,000 people to see your advert. This is another take on the previous strategy that is also focused on impressions.
Strengths
Similar to the impression share strategy it can have some limited use cases around gaining lots of visibility for brand awareness.
Weaknesses
It’s still just focused on impressions which are extremely low in value and so hard to make much use of it as very likely to switch to clicks focused right away. We have almost never used this strategy.
3. Maximise CPV (Cost Per View) Bidding Strategy
Google’s definition
Cost-per-view (CPV) bidding is the default way to set the amount that you’ll pay for TrueView video ads in Google Ads. With CPV bidding, you’ll pay for video views or interactions (such as clicks on call-to-action overlays, cards and companion banners). A view is counted when someone watches 30 seconds of your video ad (or the duration if it’s shorter than 30 seconds) or interacts with the ad, whichever comes first.
Our definition
CPV is where you are looking to drive as many 30 second views on a video as possible and so you tell Google to optimise for the lowest cost per view possible so that you get the most back for your budget.
Strengths
This is great for Youtube campaigns where direct conversions are less so for example when you’re building up a Youtube channel and subscribers might be your goal instead.
Weaknesses
It is still ultimately an engagement metric and so a view is not valuable often in of itself. So it doesn’t necessarily connect to subscribers, sales or leads.
4. Manual CPC (Cost Per Click) Bidding Strategy
Google’s definition
A bidding method that lets you set your own maximum cost per click (CPC) for your ads. This differs from automated bid strategies, which set bid amounts for you.
Our definition
Manual cpc bidding is where you take full control of how much you’re happy to bid on any particular auction. So if you set $0.50 then whoever turns up for the auction for each impression, you are happy to spend up to $0.50 to win your spot.
Strengths
It gives you complete control and so helps in more strategic situations where you’re looking to do things outside of the normal logical flow. For example brand campaigns are a great use case.
Weaknesses
It involves a lot more work if you try to use manual CPC bidding through throughout any larger campaign. It also doesn’t give Google the space to adjust bids based on all the other data that it has available to it that we don’t see.
5. Enhanced CPC (Cost Per Click) Bidding Strategy
Google’s definition
A bid strategy that adjusts your cost per click (CPC) to help maximise conversions or conversion value. ECPC combines manual bidding with a Smart Bidding strategy, like Target CPA or Target ROAS. This strategy raises your manual bids in situations that seem more likely to lead to a sale or other conversion on your website, and lowers your bid for situations that seem less likely to lead to a conversion.
Our definition
Enhanced CPC can be used alongside manual CPC bidding to give Google some freedom to adjust your bids beyond what is set if they think that a conversion is likely.
Strengths
It brings the benefits of automated bidding in general where Google is intelligently optimising for whatever you’re trying to achieve.
Weaknesses
It gives up control again to Google and so when the robots aren’t working how you like it means you can’t so easily adjust to correct for that.
6. Target CPA (Cost Per Acquisition) Bidding Strategy
Google’s definition
Target CPA bidding is a Smart Bidding strategy that sets bids for you to get as many conversions (customer actions) as possible. When you create the Target CPA (target cost per action) bid strategy, you set an average cost that you’d like to pay for each conversion. When a customer does a Google search that fits your product or service, Google Ads uses your target CPA to set a bid based on the auction’s likelihood to convert.
Our definition
Target CPA bidding is where you are setting a target on how much you’re happy to spend per conversion/acquisition/sale/lead. So for example you’re happy to spend up to £50 in ad spend to achieve a sale.
Strengths
This is great when you know your metrics well and where your profit line is. If your b2b SaaS business makes £2,000 in the lifetime of a customer and you have a 70% profit margin so make £1,400 per customer, you’re able to spend up to that point and still be in a profitable situation.
So setting a target CPA of say £1,000 is a clean efficient way to give Google the space to bid as is needed to achieve that cost per customer.
A lower CPA is almost always better but a higher CPA means more space to spend more and so more volume possible.
Weaknesses
This strategy does require a significant number of conversions coming in for the system to have enough data to optimise correctly. If you try to start up a Target CPA campaign too early with say 20 or less conversions per month you will likely see your traffic drop off a cliff as Google struggles to find conversions from its limited data set that meet your target CPA goal.
7. Target ROAS (Return On Ad Spend) Bidding Strategy
Google’s definition
Using Google Ads Smart Bidding, this bid strategy analyses and intelligently predicts the value of a potential conversion every time a user searches for products or services that you’re advertising. Then it automatically adjusts your bids for these searches to maximise your return on them.
In practice, this means that if the bid strategy determines that a user search is likely to generate a conversion with high value, target ROAS will bid high on that search. If this bid strategy determines that the search isn’t likely to generate a high-value conversion, it’ll bid low. Your bids will be automatically optimised at auction-time, allowing you to tailor bids for each auction. Review Your guide to Smart Bidding.
Our definition
Target ROAS looks to achieve a particular amount of revenue back per amount of spend invested. So a 1x ROAS means for every $1 spent, you made $1 back. a 10x ROAS is every $1 spent made $10 back. So target ROAS lets you set what return on ad spend you’re happy with.
To understand what ROAS is better and how it sits alongside ROI, I’ve released a short video on this as it’s such an important point to be clear on.
Strengths
If you have a SaaS company that has a more complex pricing structure and you’re trying to run them through the same campaign then ROAS can be a great simple metric to judge each conversions performance in a balanced way. If one conversion is worth $100 and another $1,000 then ROAS takes into account those values when judging the value of each keyword and auction.
Also if you are looking to scale your SaaS as aggressively as possible then you might be happy to set your ROAS to only 1.1x which is only just profitable but will give Google the most space to set higher bids.
Weaknesses
Having a target cost per acquisition can often be simpler for SaaS companies when optimising their advertising as you look at the full lifetime value of each client.
It also requires a significant amount of conversion data to be able to optimise correctly just like the other automated conversion-focused bidding strategies.
8. Maximise Conversions Bidding Strategy
Google’s definition
Maximise conversions automatically sets bids to help get the most conversions for your campaign while spending your budget.
Notes:
- When you’re using Maximise conversion value without a target CPA set, we’ll aim to spend your budget to maximise conversion value for your campaigns.
- When you’re using Maximise conversion value with a target CPA set, we’ll help get as much conversion value as possible at the target return on ad spend (ROAS).
It uses advanced machine learning to automatically optimise bids and offers auction-time bidding capabilities that tailor bids for each and every auction.
Our definition
Maximise conversions says go to try to get me as many conversions as possible in total quantity. So as many new clients signed up as possible to your free trial for example.
Strengths
This is a great option when you’re looking to just build up your client base as quickly as possible in total size rather than value. For a SaaS company with a simple pricing structure where each new sign up is similar in value, this is a great simple way to focus your Google Ads.
Weaknesses
It doesn’t take into account value of each conversion and so if you have a more complex pricing structure with many tiers then it sees your ‘solo user’ plan for $20 the same as your ‘big team’ plan for $10,000 the same. This will then wrongly optimise your ads.
It also again requires a significant amount of conversion data to work. Really don’t look to start this strategy without 30-40+ conversions per month.
9. Maximise Conversion Value Bidding Strategy
Google’s definition
Maximise the total conversion value of your campaign within your specified budget with the Maximise conversion value bidding strategy.
Notes
- When you’re using Maximise conversion value without a Target ROAS set, we will aim to spend your budget to maximise conversion value for your campaigns.
- When you’re using Maximise conversion value with a Target ROAS set, we will help get as much conversion value as possible at the target return on ad spend (ROAS).
This bidding strategy uses advanced machine learning to automatically optimise and set bids. It also offers auction-time bidding capabilities that tailor bids for each auction. You define the value that you want to maximise, such as sales revenue or profit margins, when you set up conversion tracking for your account.
Our definition
Maximize conversions value with Google ads is focused on achieving the most possible conversion value from your budget as possible. So with different conversions being valued at different amounts like in a tiered pricing structure in a SaaS business, this takes those values in and optimises to get the most total value back.
Strengths
This is great for getting the most possible value back when you have more complex tiered pricing structures. It still ultimately is looking to get as many conversions as it can but also takes into account that some may have higher value than others.
Weaknesses
If your conversions are all the same value then you should just use the maximise conversions version of this.
It also again requires significant conversion data to be built up over the past 30 days to be able to find users that convert and bid on them. If you go too early your account will often splutter to a halt as it fails to find anyone to convert.
Conclusion
To find the best Google Ads bidding strategies for SaaS, think on what your goals is first. Are you just looking for exposure, looking for as many sales as you can and not worried about returns or are you just looking for the full package of highly profitable and scaled.
Consider your company structure on whether you have a simple pricing structure or not and really dig into what your business numbers are. Understanding the lifetime value of your customer is invaluable in understanding the success of your google ads campaigns.
You likely will start out with strategies like maximise clicks and then transition to conversion-focused options as you scale up. Plus niche strategies like target CPV will always be of use in certain cases.
What’s most important is recognising the strengths and weaknesses of each and thinking of them as your toolkit to make Google understand what your goal really is.
Good luck to you!!
This article has been written by Max Sinclair, founder of Snowball Creations, a paid advertising agency, specialising in helping positive impact brands scale through ads!
Find more training and tips around Google Ads and other marketing-related goodness in written form at our sustainable marketing blog and in video form on our Youtube.
