Bidding and Budgeting in Google Ads

Running ads on Google is not just about writing great ad copy—it’s also about knowing how much to spend and how to bid smartly so your ads appear in the best positions at the best price.

In this module, we’ll explain:

How the Google Ads auction system works
What bidding strategies you can choose from
How to set your daily budget and make sure your money lasts

Let’s break it down in simple terms.

How the Google Ads Auction Works

Every time someone searches on Google, an auction happens in milliseconds. Google decides which ads appear, in what order, and at what cost.

How does it work?

When someone searches a keyword:

Google checks which ads are eligible for that keyword.
Each advertiser’s bid, ad quality, and expected performance are considered.
Google ranks the ads and shows the best ones in the top spots.

Key factors in the auction:

Bid amount: How much you’re willing to pay per click
Quality Score: Based on ad relevance, landing page experience, and expected CTR
Ad Rank = Bid × Quality Score

Important Note:
The highest bidder doesn’t always win. Even if you bid less, your ad can still rank higher if it’s more relevant and useful to users.

Bidding Strategies in Google Ads

Google offers several bidding strategies depending on your goals—whether it’s getting more clicks, conversions, or visibility.

Let’s look at the main ones:

1. Manual CPC (Cost-Per-Click)

You set the maximum bid yourself for each keyword.

Best for: Beginners who want full control
Example: You decide to bid ₹20 for the keyword “buy shoes online”

Pros: Total control
Cons: Requires regular monitoring

2. Enhanced CPC (ECPC)

You set bids manually, but Google can adjust your bid slightly up or down based on the chance of getting a conversion.

Best for: Getting more conversions without losing control

Pros: Smart + manual mix
Cons: Still not fully automated

3. Target CPA (Cost Per Acquisition)

You set a target cost per conversion, and Google automatically adjusts bids to get you as many conversions as possible within that cost.

Best for: Getting more leads or sales at a specific cost

Example: You set a Target CPA of ₹200. Google tries to get leads under that price.

Pros: Optimized for conversions
Cons: Needs good historical data to work well

4.Target ROAS (Return on Ad Spend)

Google tries to get you the best return for every rupee you spend.

Example: You want ₹500 in sales for every ₹100 you spend. Set ROAS as 500%.

Best for: eCommerce businesses with sales tracking

Pros: Profit-focused
Cons: Needs conversion value tracking set up properly

Other Smart Bidding Options:

Maximize Clicks – Get the most clicks for your budget
Maximize Conversions – Google spends your budget to get the most conversions
Maximize Conversion Value – Focus on high-value purchases or leads

Budget Allocation and Pacing

Your budget tells Google how much you want to spend per day, per campaign.

Daily Budget

When you create a campaign, you enter your average daily budget.

Example:
If you set ₹500/day, Google may spend slightly more on some days (₹600), and less on others (₹400), but it balances out monthly.

Monthly spend = Daily Budget × 30.4 (average days in a month)

How to Allocate Your Budget Wisely

Start small, test results, and then scale.
Allocate more budget to high-converting campaigns.
Use separate budgets for different goals (e.g., brand awareness vs. sales).

Budget Pacing Tips

Don’t spread a small budget across too many campaigns.
Pause low-performing keywords to focus on top ones.
Use shared budgets if you want Google to distribute your budget across multiple campaigns.

Summary

Google Ads uses an auction system to decide ad placement and cost per click.
Choose the right bidding strategy based on your goals—Manual CPC for control, or Target CPA/ROAS for automation.
Set a daily budget that fits your business size and campaign goals.
Monitor and adjust your spending based on which campaigns give you the best return.

Real Life Example:

Imagine you own a small bakery in your neighbourhood. You just launched a new website but no one knows about it yet. You want customers who are searching online for “fresh cakes near me” to find your bakery quickly. Instead of waiting months for your website to appear in Google’s organic results, you create a Google Ads campaign targeting that exact phrase. You start with a daily budget of ₹500 and choose Manual CPC bidding, setting ₹20 max bid per click. After a week, you notice some keywords are costly but don’t convert well, while others bring many orders at lower cost. You pause the expensive keywords and shift more budget to high-performing ones. Over time, you switch to Target CPA bidding, setting a goal of ₹200 per order. Google automatically adjusts bids to get more orders within that cost. Your bakery’s ads consistently show at top positions, bringing steady new customers daily. This example shows how smart bidding and budgeting help you get the best results without wasting money.

Bidding and Budgeting