You will be able to pick a bid strategy that suits how much conversion data you have.
The right bid strategy depends mostly on how much reliable conversion data the platform has to work with. With little data, or data you have not tested, keep the strategy simple. Once you have plenty of tested conversions, you can give the platform a target taken from your own break-even numbers.
Priya runs a business where people who respond to her ads book a trial, and some of them become students. When she builds her first Google campaign, the bidding screen offers maximise clicks, maximise conversions, target cost per action, maximise conversion value, target return on ad spend, and setting bids by hand. Meta shows her a similar menu under different names. None of the options comes with a clear rule for when to use it, so she needs to work one out from her own situation.
With manual bidding, you set the bid yourself, for example the most you will pay for a click on a keyword. Google still offers manual bidding for Search campaigns. It gives you direct control, but you make one decision per keyword. The platform could instead decide per auction, using far more information than you have: the device, the time, the location and the person's recent behaviour.
With automated bidding, you tell the platform what you want, and it sets a bid for each auction based on how likely it predicts that person is to convert. This is the estimated action rate from lesson 1.1, The highest bid does not always win, working on your behalf. On Google, automated strategies are often called smart bidding. Meta and TikTok use automated bidding by default for most objectives.
Automated strategies come in two kinds. A maximise strategy gets the most results possible for your budget. Maximise conversions on Google and the highest volume option on Meta are examples. A target strategy asks you for a number: either a target cost per action, which is the average cost per conversion you want, or a target return on ad spend, which is the revenue you want back for each dollar spent. Strategy names change, so check each platform's current list before you choose.
An automated strategy is only as good as the conversion data it learns from. Before you choose one, check your tracking for three problems:
Missing tracking, which leaves the platform nothing to optimise towards. Tracking that counts the wrong thing, such as page views labelled as leads, so the platform optimises very efficiently towards the wrong result. Tracking that double-counts, so the platform thinks it is doing better than it is and bids too high.
This is why module three, on tracking, comes before this one. A conversion you have tested, as in lesson 3.4, Install and test your tracking, gives automated bidding a solid base. Without one, the platform is optimising on guesses.
Volume matters as well. A campaign recording only a handful of conversions a month gives the system little to learn from, and target strategies in particular may struggle. At low volume, the better start is usually a maximise strategy with no target, or optimising for a more frequent event just before the sale, as lesson 2.1, The objective tells the platform what to find, suggested.
When you have enough reliable conversions, you can consider a target strategy. Use target cost per action when each outcome is worth about the same, and target return on ad spend when order values vary.
Take any target from your numbers in lesson 8.1, Start from what a customer is worth, rather than from a feeling.
Priya's figure from lesson 8.1 is a maximum of S$300 per student. Her close rate is one in three (an example figure), so S$300 x 1/3 = S$100 is the most she can pay for a trial booking. S$100 becomes her Google target cost per action, but only once her tracking has recorded enough bookings.
Farah sells products whose order values vary, so a return on ad spend target suits her sale better. To break even on a first order, the profit on each sale has to cover the ad cost, which means ad spend can be at most the margin percentage of revenue. Farah's margin is 45 percent (an example figure), so her ad spend can be at most 45 percent of revenue. To find her break-even return, she takes the margin as a decimal and divides S$1 by it: S$1 / 0.45 = about S$2.22 of revenue per S$1 of ads, or 222 percent return on ad spend. Below that, her first order loses money. She might set her target a little above 222 percent to leave a margin of safety.
Once a target is set, change it in small steps and give each change time to settle. Big jumps can send the campaign back into the learning phase, which lesson 8.3, The learning phase: why results wobble at first, explains. If the platform consistently cannot hit your target, look at your offer, creative and market as well as your bid.
Meta also offers caps that limit what you pay. A cost cap asks the platform to keep the average cost per result around a figure you set. A bid cap limits the bid in each individual auction. TikTok's help pages describe its bidding differently. Maximum Results is a spend-based strategy that aims for the most conversions within your budget. Target Cost per Result is a goal-based strategy where TikTok tries to deliver your ads at a cost per action you set. Check TikTok's own help pages for the options currently available for your campaign. Caps are useful when you have a hard limit, such as your break-even figure from lesson 8.1.
The risk is setting a cap below what the market will accept. The platform then wins fewer auctions, delivery slows or stops, and you may spend almost none of your budget. A campaign that spends nothing has not saved you money, because it has given you no results to learn from. Start the cap near your real break-even point rather than a hopeful figure, and watch spend in the first days. If the campaign barely delivers, the cap is too tight and you should loosen it.
Decide now what you will use for your first campaign on each platform. In the activity below you will choose a bid strategy and write why.
For each platform you plan to use, pick a bid strategy for your first campaign and write down why you chose it.
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