Paid Search Bid Optimization: How to Maximize Your Budget

Frenemy: A person with whom one is friendly despite a fundamental rivalry.

If you're in marketing, you might think of search engine advertising platforms as your "frenemy." You're kind of like friends because they distribute your ads, and kind of like enemies because you're both self-interested. You're each trying to make the most money possible and that can create conflicting interests.

You're in a constant tug-of-war with the search engine and your competitors to ensure your ads are showing up at the top of the search results page and driving the highest quality traffic possible. And if people are clicking on your ad but not converting, the search engine is still getting paid and you're still getting charged. It's your job to make sure you're spending that money wisely.

What Is Paid Search Bid Optimization?

Paid search bid optimization is the process of adjusting how much you pay for keywords to maximize ROI while maintaining competitive ad placement. Every time someone searches, an auction determines which ads show up and where they rank based on your bid amount and ad quality.

The goal is to balance spend against performance. Bid too low and you lose visibility to competitors. Bid too high and you burn budget on clicks that don't convert. Optimization means finding the price point where you're driving qualified traffic without overpaying for position.

This matters because search engines profit from clicks, not your conversions. Their algorithm rewards ads that get clicked. Your job is different: spend efficiently on searches that drive pipeline.

How the Google Ads Auction Works

Every search query triggers a real-time auction. Google evaluates all advertisers competing for that keyword and decides which ads to show and in what order. Understanding this mechanism is how you control costs and improve position.

The auction uses Ad Rank to determine placement. Ad Rank is calculated from three factors:

• Maximum bid: The most you're willing to pay per click

• Quality Score: Google's rating of your ad's relevance and expected performance

• Expected impact of extensions: How ad extensions may improve click-through rate

Higher Ad Rank wins better positions. But Ad Rank isn't just about spending more. Quality Score matters as much as bid amount.

Ad Rank and Quality Score

Ad Rank follows this formula: bid × Quality Score × expected extension impact. Quality Score is Google's 1-10 rating based on three components:

• Expected CTR: How likely users are to click your ad based on historical performance

• Ad relevance: How closely your ad matches the search intent

• Landing page experience: How useful and relevant your landing page is to the searcher

A higher Quality Score means you can win better positions at lower costs. An ad with a Quality Score of 8 and a $2 bid can outrank an ad with a Quality Score of 4 and a $3 bid.

How Your Bid Affects Ad Position

Bid amount is only one factor in ad position. The relationship between bid, Quality Score, and position means overbidding on low-quality ads still loses to well-optimized competitors.

Deciding how much to spend on keywords depends on context. Search platforms quote average bidding prices, but you need to evaluate whether their recommendations align with your goals. Consider these factors when deciding to overbid:

• Search intent: Keywords like "ABM software vendors" signal purchase readiness. Searchers want a list of companies that sell a specific product.

• Audience data: Prospects who have completed demos and are now searching for category terms are in-market buyers worth overbidding for.

Bidding Strategy Types: Manual, Automated, and Smart Bidding

Choosing how to manage your bids affects both performance and how much time you spend in the platform. The three main approaches are manual CPC, automated bidding, and Smart Bidding. Each serves different needs.

Manual CPC Bidding

Manual CPC means you set maximum bids yourself at the keyword or ad group level. You have full control over how much you're willing to pay for each click. When to use manual bidding:

• New campaigns: When you have limited conversion data for algorithms to learn from

• Tight budgets: When you need precise control over every dollar spent

• Niche keywords: When search volume is too low for automated systems to optimize effectively

The tradeoff is time. Manual bidding requires constant monitoring and adjustment as competition and performance shift.

Automated Bidding

Automated bidding uses rules-based algorithms to adjust bids based on historical data. It's faster than manual management but less sophisticated than Smart Bidding. Common automated strategies include:

• Maximize Clicks: Spends your budget to get the most traffic possible

• Target Impression Share: Bids to show your ad a certain percentage of the time

Automated bidding uses past performance to predict future results. It doesn't factor in real-time signals like device, location, or time of day.

Smart Bidding

Smart Bidding is Google's machine learning-powered approach. It optimizes bids for conversions using real-time signals at auction time.

Smart Bidding considers:

• Device (mobile, desktop, tablet)

• Location and proximity to business

• Time of day and day of week

• Remarketing list membership

• Browser and operating system

• Language and demographics

Smart Bidding requires conversion tracking to work. The algorithm learns from your conversion data and adjusts bids to hit your target.

With potentially thousands of keywords and campaigns in your portfolio, automated bidding is the most efficient way to spend your time and money. Set your target cost per acquisition or return on ad spend, and let the algorithm do the rest. It will adjust the bids based on what the historical return has been.

Goal-Based Bidding Strategies

Your bidding strategy should match your business objective. Are you optimizing for volume, efficiency, or revenue value? The goal determines which strategy makes sense.

Google offers four main goal-based strategies. Each targets a different outcome. Choosing the right one depends on what you're measuring and what conversion data you have available.

Target CPA (Cost Per Acquisition)

Target CPA lets you set the average amount you want to pay per conversion. The algorithm adjusts bids in real-time to hit that target across your campaign.

Best for campaigns where you know your acceptable acquisition cost. If you can afford to pay $100 per lead, set that as your target CPA and Google will optimize bids to deliver conversions at or below that price.

Target CPA requires conversion history for the algorithm to learn. Google recommends at least 30 conversions in the past 30 days before switching to this strategy.

Target ROAS (Return on Ad Spend)

Target ROAS sets your desired return on every dollar spent. If you want to generate $5 in revenue for every $1 in ad spend, you'd set a target ROAS of 500%.

This strategy works best when you can assign conversion values. For B2B, that means tracking deal size or customer lifetime value and passing that data back to Google Ads. The algorithm then prioritizes conversions with higher values.

Target ROAS requires conversion value tracking. Without revenue data, the algorithm can't optimize for return.

Maximize Conversions and Maximize Clicks

These are simpler strategies that optimize for volume within your budget.

Strategy comparison:

• Maximize Clicks: Best for awareness campaigns or driving traffic to content. Spends your budget to get the most clicks possible.

• Maximize Conversions: Best for lead generation or conversion-focused campaigns. Spends your budget to get the most conversions possible.

Maximize Clicks makes sense early in the funnel when you're building awareness. Maximize Conversions works when you have conversion tracking in place and want to drive bottom-funnel actions.

Bid Adjustments: Device, Location, Time, and Audience

Bid adjustments are multipliers that increase or decrease your bids based on context. They're a fine-tuning layer on top of your base bidding strategy.

Smart Bidding handles some adjustments automatically by analyzing real-time signals. But manual adjustments still matter for certain contexts where you have specific business reasons to bid differently.

Device Bid Adjustments

You can adjust bids up or down for mobile, desktop, and tablet. If mobile traffic converts poorly for your business, lower mobile bids to shift budget toward desktop.

If you don't have a great mobile-optimized website, consider bidding more for desktop and less for mobile. Don't waste money on mobile if you know that you're unlikely to convert those leads.

Review device performance regularly. Mobile behavior changes as site experience improves.

Location and Geographic Targeting

Geographic bid adjustments let you pay more or less based on where the searcher is located.

For B2B, consider these adjustments:

• Bid up in regions where your target accounts are concentrated

• Exclude or bid down in areas with historically low conversion rates

• Increase bids in enterprise-dense metros where deal sizes are larger

Location adjustments work at the country, state, city, or radius level. Use them to focus spend where your sales team has coverage or where your ideal customer profile clusters.

Dayparting and Ad Scheduling

For B2B companies, prospects search during business hours. Run ads during business days and hours to ensure your sales team can respond immediately. Leads that wait hours for follow-up convert at lower rates.

Adjust your schedule based on your audience:

• Enterprise buyers: Stick to standard business hours (9-5 in target time zones)

• Small business owners: Consider weekend and evening hours since they often work outside traditional schedules

Don't forget to accommodate different time zones when scheduling your campaigns.

Audience Bid Adjustments for B2B

Audience adjustments let you bid higher on searchers who match specific criteria. The main audience types to consider:

• Remarketing lists for search ads (RLSA): People who've visited your site before

• In-market audiences: Users Google identifies as actively researching products in your category

• Custom audiences: Segments you build from first-party data

Bid higher on audiences showing purchase intent or who've engaged with your content. Someone who attended your webinar and is now searching for your product category is more likely to convert than a cold searcher.

Use your first-party data and lookalike audiences rather than relying on search engine native audiences. Your CRM and marketing automation data gives you better signal on who's ready to buy.

Quality Score: How to Lower Your Cost Per Click

Quality Score is Google's assessment of how relevant and useful your ad is to the searcher. It's rated on a 1-10 scale and directly affects your cost per click.

Higher Quality Score means lower CPCs for the same position. An ad with Quality Score 8 might pay $2 per click while an ad with Quality Score 4 pays $4 for the same spot.

Quality Score has three components:

• Expected CTR: How likely users are to click based on your ad's historical performance

• Ad relevance: How well your ad matches what the searcher is looking for

• Landing page experience: How useful and relevant your landing page is after the click

Improving Quality Score requires testing, and a lot of it.

Testing is the key to paid search bid optimization efficiency. Focus your testing efforts on these areas:

• Funnel stages: Split campaigns between MQLs and opportunities to determine whether cost per MQL or cost per opportunity drives better ROI

• Landing pages: Run A/B tests sending 50% of clicks to page A and 50% to page B to identify the highest-converting experience

• Ad copy variations: Test different messaging angles to improve click-through rates

• Keyword types: Compare branded keywords vs. solution-oriented keywords to understand intent differences

Always let a test run for a minimum of two weeks to gather enough traffic for meaningful analysis.

Negative Keywords and Search Term Optimization

Negative keywords are search terms you exclude from triggering your ads because they're irrelevant to your business and will lower conversion rates. Structure your negative keyword lists at three levels:

• Account level: Broad exclusions that never apply (e.g., if you sell industrial refrigerators, exclude "freezers," "mini-fridges," and "repair")

• Campaign level: Campaign-specific exclusions (e.g., when targeting restaurant owners, exclude "homeowner" and "sale")

• Ad group level: Product-specific exclusions (e.g., in a black refrigerator ad group, exclude "silver fridge" and "white fridge")

The more negative keywords you can identify and apply, the better. If you don't define your negative keyword terms, the search engine can show your ads for whatever keywords it sees fit, potentially wasting your money.

Review your search term report regularly. This shows the actual queries that triggered your ads. Look for irrelevant searches and add them as negatives. This ongoing hygiene keeps your campaigns focused on qualified traffic.

Search advertising platforms recommend additional keywords to broaden your reach. These suggestions aim to help more relevant prospects find you.

But the more complex your product, the less relevant these suggestions become. For example, if you sell recruiting software and bid on "applicant tracking system," the platform may recommend "how to get a job." Although related, it's not relevant to your product. Review suggested keywords carefully before bidding on them.

Connecting Bid Optimization to B2B Pipeline

For B2B companies, bid optimization isn't just about clicks or even form fills. It's about pipeline and revenue. The conversion actions you optimize for should connect to what your sales team can actually close.

Start by defining conversion actions that matter beyond the form fill:

• MQLs: Leads that meet your ideal customer profile criteria

• Demos scheduled: Prospects who book time with sales

• Opportunities created: Deals that enter your pipeline

• Closed-won revenue: Actual customers and deal value

Import offline conversions back into Google Ads. When a lead becomes an opportunity or closes, send that data back to the platform. This teaches the bidding algorithm which clicks lead to revenue, not just which clicks lead to form fills.

Use intent data and firmographic targeting to focus spend on accounts that match your ICP. If you're targeting enterprise software buyers, bid higher on searches from companies with 500+ employees in your target industries. Tools like ZoomInfo provide the account intelligence to layer onto your paid search campaigns.

If you're targeting prospects who have completed demos and are searching for category terms, consider overbidding. These are in-market buyers with high purchase intent.

Smartsheet used ZoomInfo to improve their advertising audience match rate by 3x and saw a 77% increase in wins at target companies. Better data meant their paid search spend focused on accounts that actually fit their ideal customer profile.

Measuring Bid Optimization Performance

Tracking the right metrics separates efficient paid search programs from budget drains. For B2B, you need to measure both platform metrics and pipeline outcomes.

Track beyond the click. Platform metrics tell you if your campaigns are efficient at driving conversions. Pipeline metrics tell you if those conversions turn into revenue.

Common Bid Optimization Mistakes and How to Avoid Them

As a marketer, wasting some money is inevitable. The goal is to waste as little as possible. Look out for these common pitfalls:

• Weak negative keyword lists: Requires thorough understanding of your persona and industry. What is your target audience NOT looking for?

• Overly broad keywords: The broader your keywords, the less relevant the traffic.

• Poor ad group structure: If you have too many keywords in one campaign, high-volume terms drown out high-value ones. Segment your highest value keywords from your highest volume keywords.

• Insufficient campaign segmentation: Not having enough campaigns prevents you from optimizing bid strategies for different goals.

• Ignoring down-funnel performance: You may discover that you spent a lot of money on keywords that converted well, but salespeople weren't able to close on them.

• Avoiding automated bidding: Manual management at scale leaves efficiency on the table.

• Relying on platform native audiences: Use your first-party data and lookalike audiences instead.

• Not tracking revenue: It's hard to pick a bidding strategy if you don't know what the return is. Know your cost per MQL and cost per demo..

• Inconsistent optimization: If you're constantly making changes, that can be havoc-wreaking on the machine learning's ability to really know your account and gain those efficiencies. Be less reactive and stay the course.

Turn Bid Optimization Into Pipeline Growth

Bid optimization isn't about lower CPCs for the sake of efficiency. It's about spending efficiently on the accounts most likely to become customers. The tactics matter: Quality Score improvements, negative keyword hygiene, Smart Bidding strategies. But the outcome matters more: pipeline you can forecast and revenue you can close.

Connect your paid search performance to pipeline metrics. Import offline conversions. Use account intelligence to target your ICP. Measure beyond the click.

Want to see how better data improves your paid search targeting? Talk to our team to learn how ZoomInfo helps B2B marketers reach the right accounts.