For those of you who use conversion tracking in Google Adwords, you now have the option of trying out a new bid management feature.

Enhanced CPC is a new feature designed to increase ROI. How it works is a bit confusing though, so we’ll do our best to explain it. The following explanation was mainly derived from Search Engine Watch.

How It Works

In short, Google will automatically adjust your max CPC based on the likelihood of a conversion occurring.  This adjustment (up or down) takes place every time an ad impression occurs. How does Google determine the likelihood of a conversion occurring? Google uses many variables in an effort to create a veritable crystal ball.  Such variables include:

  • historical performance
  • match type
  • specific words present in the query
  • user location
  • browser
  • language
  • time of day
  • day of week
  • and many more

Note that max CPC and default max CPC bids will never increase more than 30%. There is no limit on a CPC decrease.

Experimental and Incremental Implementation

In an effort to mitigate potential damage to campaigns, Enhanced CPC is implemented through split testing experimental groups. According to Search Engine Watch and ROI Revolution,

Google AdWords will split the items under management into two equal groups: a control group (not controlled by enhanced CPC) and an experimental group (which will have its bids modified).

From there Google will determine if the experimental group is yielding desirable results, and incrementally shift managed items from the control group into the experimental group.  So the control group will be split, now giving 75% of managed items to the experimental group and 25% to the control group. Furthermore, if the experimental group is still performing significantly well, Enhanced CPC bidding will be applied to 100% of keywords, adgroups, and placements.

Conclusion

Enhanced CPC is not meant to replace Conversion Optimizer.  But if you wish to have more control over your bid management, this may be a feature worth trying.

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