AdWords Enhanced CPC vs. Conversion Optimizer

By Kaitlyn Smeland Dhanaliwala | Aug 22, 2010
More Articles by Kaitlyn

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Last week, there was some buzz in the SEM industry about the new AdWords bidding feature called Enhanced CPC.  Enhanced CPC is defined by Google as a new automatic bidding system that…

“…dynamically raises or lowers your Max. CPC bids to acquire more conversions at or below your current CPA. If it estimates a particular auction is more likely to convert than the average auction for that keyword, it increases the Max. CPC bid. Conversely, if it estimates a particular auction has a relatively low chance of resulting in a conversion, it lowers the bid to reduce the cost of a potential click from that auction.”

This description (specifically the part about automatically raising and lowering maximum bids with the ultimate goal of improving conversion data) sounds really familiar.  Isn’t this what the Conversion Optimizer (CPA) feature does?

Well, the two systems are very similar:

  • Both Enhanced CPC and the Conversion Optimizer automatically bid up keywords with higher historical conversion rates.
  • Both systems bid down keywords with lower historical conversion rates.
  • Both systems take into account a multitude of targeting factors about each individual search query (user location, language setting, search query match type, relevance of a particular broad-matched query, etc.)

But there are two major differences between Enhanced CPC and Conversion Optimizer:

  • The Conversion Optimizer allows you to specify a desired CPA (cost per conversion).  Enhanced CPC does not allow you to set that end goal.
  • Enhanced CPC allows you to continue adjusting keyword bids manually.  It automatically changes bids for you, but it never bids more than 30% higher than the maximum CPC that you set.  The Conversion Optimizer has not limit on bid adjustments.

So Enhanced CPC is a feature for advertisers who want to take advantage of the conversion-focused bidding system of the Conversion Optimizer but who also want to retain some bidding control.  I think this should be a great tool for AdWords account managers of a certain experience level.

I, for one, feel that this latest new feature from AdWords also resumes the age-old debate about how much more transparent Google could make the AdWords bidding system for advertisers.  But I certainly do think that Enhanced CPC represents a step in the right direction.  If you’re ready to try Enhanced CPC for yourself, simply go to Campaign –> Settings –> Bidding and budget.  The “Manual bidding for clicks” radio button must be selected.  Check the box under “Enhanced CPC” to “Use my conversion tracking data and bids to optimize for conversions).

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