If your campaign is setup for Display network and you are using both the keyword and placement targeting then AdWords allows you to choose one of the bidding method based on your business objective.
Taking an example to explain Target Bid & Bid Only :-
Now suppose your campaigns have a keyword “Goa Tour” in your Ad Group and you have also added one placement “mapsofindia.com”. here you can find two cases:-
Target and bid: Show ads only on placements you’ve selected when you see the venn diagram, it will help to understand the concept.
2.) If you want to show on sites based on your keyword e.g “Goa Tour”, but you think that your potential customers visit specific website “mapsofindia.com”, thus you could add “mapsofindia.com” as placement in your ad group and select “Bid only.” Then, you could set a bid on those placements to increase your chances of showing there when your keyword matches that placement.
3) Target & bid allows you to place your ads only in those placements where all the requirements of your targeting methods are fulfilled
4) Target & bid reaches to less people comparing to bid only but the probability of relevancy is high.
Bid only: Show ads on any placement when it matches other targeting methods in your ad group, like display keywords and topics.
Here is the look the venn diagram below :-
2) Bid only option allows you to place your ads in all those places where any one of your targeting requirements are fulfilled
3) Bid only reaches to a higher no. of people with a less probability of good relevancy