Joel Pinkham

Google has just announced Enhanced CPC bidding

As days go by, I’m losing trust in Google’s bidding methods and feeling like I need to use a third party bid management tool. But let’s take a look at the options we have using AdWords:

1. CPC Manual Bidding
2. CPC Manual Bidding with enhanced CPC
3. CPC Automatic bidding
4. Max CPA
5. Target CPA

I’m not even going to bother talking about Manual Bidding (it’s obvious), Automatic Bidding (never, ever use this) or Max CPA (why would you use Max CPA when you get use target CPA?).

Enhanced CPC

You set the bids and Google tries to assume if the actual users search query is more likely to convert (which makes smart bidding).

Advantages

• Individual bids for a lot of different search queries  – your keyword listed in AdWords will match a multitude of user search terms. So instead of setting up a huge campaign with a lot of exact match terms with individual bids, it does that work for you
• It finds patterns it what converts – let’s say your keywords are “gifts”, “birthday gifts” and “gifts for dad”. Enhanced CPC might find that when the user adds “buy” to their query they’re more likely to purchase, and when they add “ideas” then they’re less likely. You might be bidding $2 for “gifts”, but when someone searches “buy gifts” Google puts your bid to $3, or when someone searches “gift ideas” your bid goes to $1

Disadvantages

• You give Google permission to increase your CPC at their will, based on their assumptions (they say it won’t raise for cost-per-conversion, but of course it would for your high performing keywords)
• Google makes assumptions very quickly – they can get it wrong to start with

Target CPA

You set the end amount you want to spend on a conversion at an ad-group level.

Advantages

• You don’t have to worry about bidding and Google “tries” to meet your conversion expectations
• Let’s you focus on things like creating new ad groups & testing new ad copy – where you (as a person) can add real value
• Computers are smarter than humans when it comes to calculation

Disadvantages

• It starts out bad – everytime I’ve started using Target CPA on a campaign my CPC gets massive. It comes back down but overall not all that trustworthy
• You’re relying on Google to maximise your revenue, when they also want to maximise their revenue
• You could actually be better a better cost-per-conversion but the system will push your bids up to your target (meaning all of your ad-groups need

In Conclusion?

I’m testing out Enhanced CPC now on 1 of my campaigns, and will see how it goes. Target CPA needs time to really test out but none of them really match ROAS bidding like you can do with a bid management tool.

Tags: adwords, google

This entry was posted on Wednesday, August 18th, 2010 at 10:11 am and is filed under Search Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.