Target and Max bidding are separated by a single checkbox. However, the implications of that single check can be quite large in how your campaign performs.
In this article, we’ll explain the differences in the bid methods and when to use each one based on your data and your goals.
Smart Bidding Types:
What is Max Conversion & Conversion Value Bidding?
With the ‘max’ values, which can be the most conversions possible (max conversion bidding) or the most revenue possible (max conversion value bidding), Google’s goal is to spend your budget to get the most of your target goal, conversions, or revenue.
Target CPA vs Target ROAS
What is Target CPA & Target ROAS Bidding?
With the ‘target’ values, you input a value that you want the machine to achieve. For instance, if you want an average cost per action of $20, you can input $20. If your goal is a 400% ROAS, you can simply input 400% when using target ROAS bidding.
The Pros & Cons of Max Bidding
Max bidding can be useful when you do not have a lot of conversions for the machine to work with. With low data, conversions can be unpredictable, and the machine needs to attempt to project potential conversions (what we humans call guesswork) in order to try to get the most conversions or revenue possible.
Due to the lack of data, the CPA or ROAS numbers can be highly varied daily, often leading to unpredictable results. Since the machine is hungry for more data, it will try to spend as much budget as possible in order to get more data. This can result in spending your marketing dollars on very poor search terms.
One of your best optimization tools is your budget and budget calculator. You might find times you can lower your budget and get the same number of conversions or revenue since your extra budget was spent on poor queries for the machine to learn instead of queries that would convert.
Max Conversion and Max Conversion Value Bidding do not care about your targets. If there are 10 potential conversions and the first 9 are going to cost $10, and the last one will cost $1500 if you have a $1600 budget, the system will try to get all 10 for you. This is a huge difference from Target CPA bidding, which we’ll discuss shortly. This means if you do not care about the cost per conversion or your ROAS, the ‘max’ options are best for you since they want the most conversions and revenue regardless of their cost.
As your conversions increase and your data becomes more predictable, Max Conversion and Max Conversion Value Bidding will apply the same rules as with low conversion data. The bidding system will try to get as many cheap conversions as possible since that is the goal of the bidding system, but if you have a high budget, it will keep spending your budget to get any extra conversions or revenue regardless of the cost. This is how you can often end up spending more money on marketing than the conversions attained in revenue.
In general, the two best times to use ‘max’ bidding are when:
- You have low-conversion data
- You do not care about your CPAs or ROAS and just want the most possible
The biggest drawback is that it will try to spend your budget. Raising your budget might help you attain more revenue and conversions if you are getting very good results since there are often more conversions to attain. If your CPA is too high or your ROAS too low, lowering your budget (or adding more targeting options, such as other good keywords or audiences) can help lower your CPAs or raise your ROAS.
The Pros & Cons of Target Bidding
With Target CPA & Target ROAS bidding, you give the system rules regarding what you want the bidding system to achieve for you. Because the system is trying to achieve specific numbers, if the data is highly unpredictable, such as with low conversion or revenue numbers, the system might not enter you into the auction since it doesn’t know the outcomes. This is why Target CPA and Target ROAS can often fail with a small number of conversion points – it doesn’t have enough data to make good decisions.
As your data becomes more predictable, meaning you have more revenue and conversions, the system can learn the cost of trying to achieve certain conversions and revenue and make better decisions as to when it wants to try and get a specific conversion for your campaign.
Target CPA and ROAS use a portfolio strategy, meaning the blended conversions or revenue should hit your target, not each individual conversion.
For instance, if you have a target CPA of $15, and these are the possible conversions:
- Conversion 1: $5
- Conversion 2: $15
- Conversion 3: $25
- Conversion 4: $50
The system would want conversions 1, 2, and 3 as the overall CPA would be $15, even though conversion 3 was more than your target CPA. However, if the system also bid for conversion 4, it would push your CPA past its target, so it will not try and attain conversion 4 in this instance.
This example is a big difference between Max and Target bidding. Max bidding would want conversion 4 since it increases the total conversions. Target bidding does not want conversion 4 as it would raise the actual CPA too far past your target.
Target Bidding is best when:
- You have a lot of conversions (minimum of 15 per campaign per month, but ideally 30-50+ per month), AND
- You have a CPA or ROAS goal you are trying to achieve
Because Target bidding only tries to attain conversions that hit your targets, if you have a high impression share loss due to budget, raising your budget should get you more conversions at a similar ROAS/CPA than you currently receive. However, lowering your budget rarely results in cheaper CPAs or higher ROAS and generally only results in fewer conversions.
Choose the Best Google Ads Bid Strategy
Our General Rules for Which Bid Method to Use
Google Ads can be unpredictable at times, so nothing is always 100% true when discussing PPC tactics. However, these general rules should help guide you on when you should use target or max bid strategies.
You want the most conversion or revenue possible regardless of what it costs you: Max Conversion or Max Conversion Value bidding since these two bid methods do not care about their targets, they only want the most possible.
You have 15 or fewer conversions each month in a campaign: Max Conversion or Max Conversion Value bidding since these two bid methods try to get the most and aren’t reliant on predictable data.
You have 15 or more conversions per month and want a predictable CPA or ROAS: Target CPA or Target ROAS bidding since these two bid methods are focused on hitting your target goals.
If you change your bid strategy, you should mark the date and use a tool like the Performance Analyzer to monitor your before and after data to ensure that switching bid strategies leads to the outcomes you are trying to achieve.
We hope this makes the differences between Target CPA/ROAs and Max Conversions/Conversion Value clearer for you to understand so you can pick the bid methods that give you the best chance to succeed in your PPC goals.
