What’s the Best Google Ads Bidding Strategy to Maximise ROI?

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Last updated on January 12th, 2026 at 12:18 am

The most common Google Ads bidding strategy mistake is optimising for revenue (ROAS) instead of profit (ROI). Most advertisers don’t realise their impressive dashboard numbers might be hiding actual losses. This guide shows you how to teach Google’s AI to chase profitable customers by feeding it your real profit data, transforming your ad spend into actual money in your pocket.

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The Billion-Dollar Question Every Advertiser Asks

Every advertiser running Google Ads bidding strategy campaigns eventually asks the same question: “What’s the best way to get the most bang for my buck?”

The problem? Most people fall into a trap that costs them thousands. They ask Google’s AI to find them revenue when they should be asking for profit. And those two things are completely different.

So, let’s get one thing straight, because this is the mistake that costs advertisers the most money. We think Google’s AI is automatically built to find us profit. It’s not.

By default, its job is to find revenue. This creates a massive and very common trap. It means your Google Ads dashboard can be full of “successful” campaigns, while your business is actually losing money because those sales have paper-thin profit margins.

This article will break down the difference and give you a three-step framework to find the best Google Ads bidding strategy for ROI that actually works for your business. Not just impressive numbers on a dashboard, but real money in your bank account.

The ROAS vs. ROI Confusion

The first thing we have to clear up is the confusion between ROAS vs. ROI.

A lot of people use these terms interchangeably, but they are not the same thing. Confusing them can make you think you’re winning when you’re actually losing money.

ROAS: The “Vanity” Metric

First up is ROAS, or Return on Ad Spend. This is your “vanity” metric.

It just measures the total sales (gross revenue) you get for every dollar you spend on ads. The formula is simply: Revenue ÷ Ad Cost.

• Example: You spend $100 on ads and get $500 in sales. You have a 500% ROAS (or 5:1). This looks amazing, right?
• The Trap: This is what Google Ads shows you by default in your dashboard. Google loves to show you a big, happy 500% ROAS because it makes their platform look great and encourages you to spend more.

But ROAS ignores one giant, all-important factor: your other costs.

ROI: The “Reality” Metric

Now, let’s talk about ROI, or Return on Investment. This is your “reality” metric.

ROI measures your actual profit. It tells you how much money you actually put in your pocket after paying for everything. The formula is: (Net Profit ÷ Total Costs) × 100.

It doesn’t just count the ad spend. It counts the ad spend plus the cost of the goods you sold, your shipping, your team’s salary, your software… ALL of it.

Why This Difference Can Cost You

Let’s use that same 500% ROAS example and see how it can go wrong.

• You spent $100 on ads.
• You made $500 in sales. (Your ROAS is 500%. You’re feeling great.)

But…

• Let’s say the cost of the products you sold (your “Cost of Goods Sold”) was $350.
• And let’s say shipping and payment processing fees were another $75.

Now, let’s do the real math: Your total expenses are: $100 (ads) + $350 (product) + $75 (shipping) = $525.

You made $500 in sales… but you spent $525. You actually lost $25.

Your Google Ads dashboard is celebrating a 500% ROAS, while your bank account is quietly shrinking. Your ROI is negative.

See the difference? ROAS measures sales. ROI measures profit. You can’t pay your rent with ROAS. You have to know your ROI to know if your business is actually growing.

The Campaign That “Succeeded” While Losing Money

Here’s how this plays out in real life.

You spend $10,000 on ads. Your Google Ads dashboard lights up with good news: you made $50,000 in revenue. That’s a 5:1 ROAS, or 500%. Looks amazing, right?

But here’s what the dashboard doesn’t show you. Your product’s profit margin is only 15%.

Do the actual maths: $50,000 in revenue × 15% profit margin = $7,500 in real profit.

You spent $10,000 to make $7,500. You just lost $2,500 while your Google Ads account looked like a winner.

This happens all the time. The goal isn’t to teach Google’s AI to chase revenue numbers. It’s to teach it to chase actual profit. The best strategy isn’t a single setting you choose once. It’s the process of feeding your profit data into Google’s powerful AI.

Understanding Manual vs Automated Bidding in Google Ads

Before you can optimise for profit, you need to understand the two main categories of bidding. This is the classic manual vs automated bidding Google Ads debate.

Manual Bidding (Manual CPC)

With Manual CPC, you’re in the driver’s seat. You set every single bid yourself, which gives you 100% control over your keywords, and any changes you make happen instantly.

This is absolutely the best choice for brand-new campaigns that have no conversion data. Your goal is to use this control to safely gather your first 30 or so conversions. Trying to use an AI (like Google’s automated bidding) before you have that data is like asking someone to predict the future with zero information. It just doesn’t work.

Smart Bidding (Automated)

Smart Bidding is where you let Google’s AI do all the bidding for you. It’s powerful because it analyses thousands of signals in real-time (like a user’s location, device, and search habits) to find the people who are most likely to buy from you.

But here’s the deal: this AI is data-hungry. It simply can’t work well without a minimum of 30 conversions in the last 30 days. It needs history to learn.

Google even says that advertisers who wait until they have that data and then switch see an average 20% boost in conversions, often at a lower cost.

Trying to start a Smart Bidding strategy without that data is just a common and very expensive mistake.

Your Google Ads Bidding Strategy Options

Google gives you several bidding options. Think of them as a menu organised by what you’re trying to accomplish.

Tier 1: “Get Me Visitors”

This tier is all about getting as much traffic as possible, as fast as possible. The strategy is: Maximising Clicks.

This bidding strategy is all about one thing: traffic. It’s perfect for a brand-new campaign when you have no data and just need to get eyeballs on your site, fast.
But let’s be clear: this is not a long-term profit plan. You’re just buying eyeballs to see what sticks, not necessarily qualified customers.

Tier 2: “Get Me Actions”

If you want to maximise conversions or CPA (Cost Per Action), then this approach is for you.

This is the go-to for most service businesses like plumbers, lawyers, or consultants. It works when every new lead (a form fill, a phone call) is treated as having roughly the same value.

You have two main options: Maximise Conversions gets you the most form fills possible for your budget. Target CPA tries to get you those form fills at a specific price you set.

But the catch is that both of these strategies are “value-blind.” They can’t tell the difference between a lead who’s just window-shopping and a lead who’s ready to sign a $10,000 contract. To Google, a conversion is a conversion.

Tier 3: “Get Me Revenue”

This tier is the go-to for e-commerce. It’s all about maximizing Conversion Value or hitting a Target ROAS.

This is the best strategy for a store because the AI can finally understand that a $500 order is much more valuable than a $50 order.

Your two options are pretty straightforward. Maximize Conversion Value tells Google’s AI to get you the most revenue possible for your budget, period. Target ROAS is more specific and gives you more control. You’re the one who tells Google, “I need to make $5 for every $1 I spend,” and the AI’s entire job is to hit that 500% return.

The Big Problem All These Tiers Ignore

So, did you spot what’s common between these options? Every single one of these strategies is “profit-blind.”

They only look at revenue (the top-line number) or the number of conversions. Google’s AI will happily chase a $500 sale… even if that product cost you $550 to sell. It doesn’t know your profit margins. That’s the expensive gap we need to fix.

How to Optimise Google Ads Bids: Teaching Google What Actually Makes You Money

This is where the magic happens. The best Google Ads bidding strategy for ROI isn’t one of the defaults. It’s a value-based strategy (like Target ROAS) that you’ve taught how to see profit.

Here are three ways to teach Google’s AI about your real profit, ranked from best to still pretty good.

Method 1: For E-commerce Businesses — Use Gross Profit Optimisation (COGS)

Google has a feature called “Gross Profit Optimisation” that lets you include a “Cost of Goods Sold” (COGS) field in your product data. Most people don’t use this feature, but it’s a game-changer.

When you tell Google that your $100 sneaker only generates $30 in profit after costs, something shifts. Once you do this, Google’s AI can automatically calculate profit for every product (Revenue – COGS = Profit). The AI stops wasting money on low-margin items and starts hunting for customers who buy your highest-profit products.

You can set this up through Google Merchant Centre by adding the cost_of_goods_sold attribute to your product feed. You must also enable “Conversions with Cart Data” for this to work.

Advertisers who enabled this saw an average 15% increase in profit, even when their revenue stayed the same.

Method 2: For Lead-Gen Businesses — Use Offline Conversion Imports

If you’re a service business, your profit isn’t known at first click. This method connects your sales database or CRM back to Google Ads using something called Offline Conversion Imports.

Right now, Google treats every lead the same. The person who fills out your form and never responds? Treated just like the person who signs a $50,000 contract.

Here’s how it works: When a user clicks an ad, Google assigns a unique ID (the “GCLID”). You save this ID in your CRM (like Salesforce or HubSpot) with the new lead. As that lead becomes “Sales Qualified” or a “Closed-Won Deal,” your CRM automatically sends that event data back to Google.

This process teaches the AI which clicks actually turn into money, so it can find more people just like them. The AI learns what a high-quality lead looks like online and finds more people who match that pattern.

Method 3: For Everyone — Use Conversion Value Rules

What if the first two methods sound way too technical? Don’t worry, there’s a great alternative. This is the “good enough” method that anyone can set up quickly.

Google has a feature called Conversion Value Rules that lets you manually teach the AI your business logic. You just create simple “if-then” rules.

For example, let’s say you know leads from Victoria are twice as valuable as leads from Queensland. You just create a rule: “IF location is Victoria, THEN multiply conversion value by 2.” Just like that, the AI learns to bid more aggressively for your most valuable audiences.

The best part is that you can stack these rules. You can add them for location, device, audience, and more. For example:

• IF Audience is ‘Past Purchasers’, THEN Multiply Value by 1.5
• IF Device is ‘Mobile’, THEN Multiply Value by 0.8 (maybe they convert less)

Look, it’s not as precise as feeding in your actual profit data, but it’s a thousand times better than treating all conversions as equal. This helps your Google Ads bidding strategy get much closer to bidding for true profit.

Your Three-Step Plan for Optimising Google Ads Bids

Here’s your complete roadmap for building a Google Ads bidding strategy that actually works. It can feel like the most confusing part of Google Ads, but I promise it’s not. It’s just a clear, three-step process designed to take you from “day one” all the way to “maximum profit.”

We’ll walk through each stage, so you’ll know exactly what to do when you’re just starting, when you’re ready to grow, and when you’re ready to optimize for real, bottom-line profit.

Step 1: If You’re Just Starting Out

Don’t use automated bidding yet. Seriously, this is the mistake that costs new advertisers the most money.

Start with Manual CPC (Cost-Per-Click). Your only goal right now is to collect your first 30-50 conversions. You’re just building that clean, stable data foundation that Google’s AI needs to work properly.

Step 2: Once You Have 30+ Conversions Per Month

Now you’re ready to let the AI take over. Once you have that data, switch your bidding strategy to an automated one that fits your business:

• For E-commerce Stores: Switch to Maximize Conversion Value or Target ROAS. These strategies teach the AI that a $500 order is better than a $50 order.
• For Lead-Gen Businesses: Switch to Maximize Conversions or Target CPA. These focus on getting you the most leads (like form fills or calls) at your target cost.

Here’s a pro tip for you: While Google’s official minimum is 30 conversions in the last 30 days, most experts agree that Smart Bidding gets way more stable and reliable once you’re at 50-100 conversions a month.

Step 3: When You’re Ready for Real Profit

This is the final, most important step. This is where you “teach” Google’s AI about your actual profit margins, not just your revenue.

Just pick one of the three “teaching” methods from earlier, based on what fits your business:

• E-commerce with clear product costs? Use Method 1 (COGS data).
• Lead-gen with a good CRM? Use Method 2 (Offline conversions).
• Want something simpler to set up? Use Method 3 (Conversion value rules).

This final step is what transforms your bidding strategy from just “chasing revenue” to “driving real, bottom-line profit.” It finally aligns Google’s goals with your actual business goals.

Frequently Asked Questions About Google Ads Bids

Stop Measuring Success by the Wrong Numbers

The best Google Ads bidding strategy isn’t a setting you choose once and forget about. It’s a system you build over time.

Most advertisers never get past measuring revenue. They see impressive ROAS numbers and think they’re winning, while their profit margins tell a different story. You can run campaigns that look successful on your dashboard but actually lose money because the system chases high-revenue sales that have very low, or even negative, profit margins.

That’s how you optimise Google Ads bids for actual ROI, not just vanity metrics.

Sounds complicated? That’s what we’re here for.

At Otto Media, we’ve partnered with many local Canberra businesses, helping them set up their Google Ads campaigns for success right from day one. We handle everything from the first step to the last.

Want to know more about our approach and how it can help you? Get in touch!