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What is a bid strategy?

Paid media

By Paweł Skibiński, Growth Strategist, Paid SocialUpdated 3 November 2026

What kinds of bid strategy are there?

Google Ads sorts its strategies by goal: conversions, clicks, visibility and video views1. Two ends of the range matter most.

  • Manual. With Manual CPC, Google says, you "manage your maximum CPC bids yourself"1. You decide what a click is worth.
  • Automated, towards a target. Smart Bidding is Google's name for bid strategies that use Google AI to optimise for conversions or conversion value2. It includes Target CPA, Target ROAS and two strategies for when you want to spend your entire budget rather than hit a set target1.

Manual: you set the price. Automated: you set the goal, the platform sets the price. Performance Max and Meta's Advantage+ sales campaigns also hand most bidding to the platform.

How does a target ROAS strategy work?

Google defines your target ROAS as "the average conversion value (for example, revenue) you'd like to get for each dollar you spend on ads"3. Google Ads predicts future conversions and their values from the conversion values you report, then sets bids while aiming at that target3. Report the wrong value, and it bids for the wrong value.

Two warnings follow. First, the target is about ROAS: revenue credited to ads, not profit. Second, Google itself notes that a target that's too high "may limit the amount of traffic your ads may get"3.

Where should the target come from?

From your margin, not from last month's panel. A guide from a fractional-CFO firm puts break-even ROAS at 1 divided by contribution margin, and calls break-even "the floor, not the target"4. Our convention: break-even ROAS uses contribution margin before marketing, meaning revenue minus product cost, delivery, payment fees and returns, before any ad spend.

Our view: a bid strategy is only as good as the number you feed it. For where it fits in the wider plan, read our paid media strategy for ecommerce.

Worked example

Easily confused with

  • Bid strategy vs Target ROAS (the setting) vs target ROAS (the business goal)

    The setting is a number in the platform. The goal is what your margin needs. They should match. Often nobody checked.

  • Bid strategy vs Budget

    The budget caps spend. The bid strategy decides how that spend is bid.

FAQ

A rider in a red cape and bicorne hat on a rearing yellow plush horse, after David's Napoleon Crossing the Alps

Is a bidding strategy the same as a bid strategy?

Yes. Both mean the rule that sets your bids.

Is Smart Bidding a bid strategy?

It is a group of them. Google calls Smart Bidding "a set of automated bid strategies" for conversions or conversion value1. Strategies aimed at clicks or visibility sit in other groups1.

What is the difference between target CPA and target ROAS?

Google describes Target CPA as a way "to help increase conversions while targeting a specific cost per action (CPA)"1. Target ROAS does the same for conversion value1. Target CPA treats every conversion as equal, which suits a shop poorly when baskets differ.

Sources

  1. Determine a bid strategy based on your goals - Google Ads HelpPrimary source
  2. About Smart Bidding - Google Ads HelpPrimary source
  3. About Target ROAS bidding - Google Ads HelpPrimary source
  4. ROAS vs contribution margin (Eightx)Vendor

Let’s find what’s actually working.

Next step. Check what your ROAS target means on explicit margin assumptions. Use the Is your ROAS real? calculator.

Is your ROAS real? calculator