AdWords offers many different bidding strategies for advertisers to use to achieve their goals – whether they choose to bid for a target location on the SERP, a target CPA, or prefer to pay for views of their video or display ads. But most advertisers rely on cost-per-click (CPC) bidding to hit their goals, so much so that we often refer to AdWords as a PPC, or pay-per-click, platform.
However, as advertisers’ accounts grow in size and complexity, it can be difficult to manage an ever-growing list of keywords, audiences, demographics, and bid adjustments in our campaigns. In 2010, Google introduced enhanced CPC (eCPC) bidding to ease some of the burden for busy advertisers, which allowed Google to dynamically adjust your bid within 30% if it believed a search was more likely to result in a conversion. Since then, eCPC bidding became the default bidding strategy for new campaigns, giving Google some level of control over many advertisers’ bids.
This Tuesday, Google announced a major change to how it would handle these campaigns’ bids – by allowing Google to automatically adjust your bid by more than 30%! Google details the full changes in its support page:
Who’s Affected by This Change?
Any advertiser who uses eCPC bidding is affected in this change. Given that this has been AdWords’ default bid strategy, that’s a potentially startling number of advertisers! Especially considering that advertisers who use eCPC bidding still perform all the same tasks as those who use manual bidding, like adjusting keyword bids, many may be using eCPC bidding without even realizing it!
To see your campaigns’ bidding strategy, look under the settings tab:
What Should You Expect to See Change?
Your average CPC
As part of this change, Google will have more control to bid up beyond the previous limit of 30% for searches it believes are more likely to convert. With this 30% cap removed, it’s safe to assume that Google may be more aggressive in its automatic bid adjustments. Although it’s possible for you to pay more than your maximum CPC for a single click in eCPC bidding, Google will still try to keep your average CPC below your max CPC bid.
Your audience bids
If you’re still not adjusting your bids for your remarketing audiences, you’re almost certainly missing out! Remarketing audiences are often much more than 30% more likely to convert on your site and many audiences can convert at 3x the rate of your new audiences.
Your bids for different locations
Google may anticipate that a user searching from Indiana may convert differently than one from India, even if they’re searching for the same keyword. If Google notices a local market boasts particularly high conversion rates, its eCPC bidding will automatically adjust you bids for that location.
What Should You Not Expect to See Change?
Your CPA (*Probably)
If you trust Google, rest easy: They don’t anticipate this change should affect your campaign’s CPA, even though your CPC may change. The expectation is Google will be bidding more exclusively for more qualified traffic that’s more likely to convert on your site.
Your set maximum CPC bid
Although Google may be adjusting your actual bid in the AdWords auction, you will not see that change the bid you set in AdWords. You can still increase your bids for high-performing keywords and segments or decrease your bids for poor-performing keywords and segments, and Google will aim to keep your average CPCs within your max bid.
Your device bids
Interesting, Google’s eCPC does not take device into account when adjusting your bids. Advertisers should still review and set appropriate bid adjustments for mobile, tablet, and desktop traffic based on the relative performance on each device.
What Should I Do About the New eCPC?
This change will be rolling out steadily over the month of May, and advertisers won’t need to (or be able to) opt in or out. If you’re currently using an enhanced CPC bidding strategy, keep a close eye on your campaigns’ performance over the following weeks. It’s likely you’ll see your CPC rise, but you should also see your CVR and total conversions rise from your campaigns still maintaining your CPA. If that’s true – Google’s doing its job and enjoy the extra profit!
You can continue to scale your success by regularly reviewing and adjusting your bids for different keywords, remarketing audiences, demographics, and devices.
If you’re not happy with the changes Google is looking to make in your account, you can always switch to a manual CPC bidding strategy. Manual CPC bidding will give you complete control over every bid in your account. However, with great power comes great responsibility – manual CPC bidding can be particularly laborious some for many advertisers and if you don’t regularly change your bids, don’t expect performance to get better on its own!
About the author:
Mark is a Senior Data Scientist at WordStream with a background in SEM, SEO, and Statistical Modeling. He was named the 14th Most Influential PPC Expert of 2016 by PPC Hero. You can follow him on Twitter, LinkedIn, and Google +.