Google announced the launch of their new automated bidding tool, Enhanced CPC, amid claims that it can improve your Return On Investment (ROI) on the campaigns where you use manual bidding.
The tool works by taking your historical conversion tracking data and automatically adjusting your max cost per click (CPC) bids based on how likely it is that your ad will convert. So theoretically you should get more conversions while maintaining or reducing your cost per acquisition (CPA). Plus you’ll spend less time managing your max CPC bids.
For example…
Joe Bloggs sells pet supplies, and has enabled Enhanced CPC for a campaign that contains the keywords ‘dog collars’, ‘leather studded dog collars’, and ‘pink diamante dog collars’, all with a max CPC bid of £0.50.
When someone searches on ‘pink diamante dog collars’, AdWords recognizes that the keyword has converted well in the past and so increases the max CPC bid to £0.55 for that auction. If historical data shows that a conversion is very likely, Enhanced CPC could bid up to 30% more than the max CPC. So the most Joe Bloggs would be charged for a click is £0.65.
Conversely, if a user searches on a term that has not converted in the past, the AdWords system will lower the max CPC, although Google hasn’t specified how low they will go with the bids.
So the idea is that AdWords ultimately helps Joe Bloggs increase sales and conversions, whilst maintaining or lowering his average cost per conversion.
So What?
It all sounds good but will this tool really make that much of a difference? What’s the difference between this and Conversion Optimiser, which also promises to boost your ROI with an easy-to-use bidding tool?
Will you get more conversion from your AdWords spend? Maybe, although the danger is that you end up spending more. If you are getting more conversions at the same CPA then surely you’re going to have to increase your spend to make the most of it. And surely you reach a point where you can’t spend anymore so you’re getting the same number of conversions at the same CPA, therefore there’s no growth in your campaigns.
And what happens when there’s another ash cloud or the stock market dips, meaning your conversion rates drop? Will Google start lowering bids on keywords that are experiencing a blip? Could they reduce bids to the point where traffic fades to almost nothing?
Don’t lose control
By using Enhanced CPC you relinquish control of your campaign bid management. Google doesn’t offer notifications to let you know when the system begins to modify bids, and you can’t see a breakdown of modified bids within the AdWords interface.
Depending on how big your campaigns are, shouldn’t you be doing this stuff as a matter of course anyway – manually, or using your bid management tool? If you’re running your own relatively small campaigns, you should be reviewing your max CPC bids regularly as part of your optimisation process. Weekly is probably frequent enough to adjust your max CPC bids.
By reviewing your own bids and changing them manually, you retain the control and can make decisions based on the performance data that is important to you. You might want to increase bids only on keywords in a particular campaign or ad group. You might decide to increase your CPA on a campaign, and reduce spend to maintain conversions in another. This tool won’t be able to make those clever decisions for you.
We do use bid management tools to increase our clients’ campaign ROI, but we always retain a level of human interaction with the tool so that we’re making absolutely the right decision for our client. As a smaller business, handing total control to Google Enhanced CPC could cost you more than you bargained for. Test with care…
If you’ve tried Enhanced CPC, we’d love to know how you’re getting on. Leave your comments…
