Enhanced CPC - Marketing Autopilot

Let Google's Advanced Systems Spend Your Budget For You

Maybe I'm too cynical, but some things are better left to human intuition and controls. Yesterday Google announced the release of "Enhanced CPC" on the AdWords blog. While this sounds like another great addition to the AdWords product suite, I'm pretty skeptical.

What enhanced CPC does is allow Google to spend up to 30% more than your set bid amount if Google's system thinks the click has a high likelihood of converting. Conversely, if the system thinks there is a low likelihood of conversion it will underbid by some amount. On the surface this sounds great, and I'm sure it would work well in some cases--particularly e-tail, but it is another case of looking at one metric and making a change without understanding the "why" behind the data.

Let's take off the Google goggles and look at their example for Jeff and his model airplane kits. From the Google blog post:

Jeff sells model airplane kits and has enabled Enhanced CPC for a campaign that contains the following keywords, each with a Max CPC bid set to $0.30: model airplane, model airplane kits, and build model airplanes. When a user searches for 'model airplane kits,' the AdWords system recognizes that this term has converted well for Jeff in the past, and therefore increases the Max CPC bid to $0.32 for this specific auction. If the likelihood of a conversion is very high, Enhanced CPC can bid up to 30% above the Max CPC. This means that the most that Jeff will be charged for a click is $0.39.

Okay, so the first problem is the AdWords system having to recognize that 'model airplane kits' converted well in the past. It's what Jeff is selling and he should have an exact or phrase match ad group for this particular term with an appropriate bid. Hopefully Jeff is also keeping an eye on things and realizing what his average position for this particular term is and how it fluctuates as a result of changes he makes and those of his competition. AdWords shouldn't have to recognize the term is converting--Jeff should know this already.

Another issue is if the term converted well in the past, will spending an additional 30% really help it convert better or is this just lining Google's pockets with some more money for the same sale?? What if Joe also sells model airplane kits and is also using enhanced CPC? Conceivably Google is going to up the bid for both by up to 30% and, from Google's perspective, hopefully get a click on both ads. Woohoo! The pennies add up quick don't they?

How about the flip side of the equation (also from the Google blog post):

On the other hand, when a user searches on a term that has not converted well in the past, e.g. 'model airplane,' the AdWords system will lower the Max CPC bid for this specific auction to $0.20. By adjusting bids based on Jeff's conversion data, the AdWords system ultimately helps him increase sales while maintaining or decreasing his average cost per conversion.

Maybe the term 'model airplane' doesn't directly convert well but generates a lot of phone calls with bigger sales. The AdWords system doesn't have this information and can't make an educated determination that reducing the bid is appropriate. Again, if 'model airplane' truly isn't converting well wouldn't it be better to have it as a negative match and ensure the ad doesn't display for that term at all? Saving all $0.20 is better than wasting it on a poor converting placement. That's another $0.20 available to the terms that convert well such as 'model airplane kits' and, unless Jeff already has 100% impression share for that term, has a better chance of resulting in a sale.

Automatic Bidding/Enhanced CPC Shouldn't Replace Good AdWords Campaign Organization

Ultimately what the enhanced CPC feature does is make it more likely that a poorly organized campaign will perform better. Create one campaign with one ad group and a zillion keywords based on Google's opportunity suggestions and you will really need enhanced CPC. We take over campaigns structured like this all the time. Usually we can reorganize and make huge percentage improvements within just a couple weeks while maintaining control over everything for the client. The added benefit is we can quickly see what is really working and what isn't. It's important to look at all the metrics, how ads interact with keywords and search terms, what people do on the site after clicking a particular ad, etc.

I understand Google wanting to make things as easy as possible for people. Unfortunately we run into a lot of folks that say PPC doesn't work. The reality is that in most cases PPC doesn't work if you don't actively manage it. Managing PPC isn't rocket science, but it does take dedication. That's where hiring someone to manage PPC and holding them accountable to return on investment goals is a great benefit. This frees you up to work on growing the business in other ways. Plus, a professional company that manages multiple campaigns can see trends across clients and implement best practices across the board. This greatly reduces the initial optimization time of any campaign and starts generating real return on investment sooner.