Similar to Google Ads, Microsoft Ads uses a bidding system where advertisers set their maximum bid amounts for clicks, conversions, or other actions. Strategies to optimize bids include adjusting bids based on performance data, using automated bidding strategies like Enhanced CPC (ECPC) or target ROAS (Return on Ad Spend), utilizing bid modifiers for specific targeting options, monitoring competitor activity, and adjusting bids to maintain a competitive position while maximizing ROI.