In the middle of May, Google announced that AdWords will start rolling out changes to enhanced CPC bidding (eCPC) beginning in early June. Advertisers logging into the AdWords interface would likely have seen the notification indicating these changes.
Background of eCPC bidding
AdWords presents advertisers with various bidding strategies to use to achieve their aims. While advertisers can decide to bid for a target CPA, bid for a target location on the SERP, pay for display ads, or pay for video views, majority of advertisers choose to depend on cost-per-click CPC bidding.
Advertisers’ accounts easily grow in complexity and size, and with this growth, it becomes difficult to manage a rapidly growing load of audiences, demographics, keywords, and bid adjustments in campaigns. It is for this reason that Google introduced eCPC in 2010, rolling out a major change in the way cost-per-click (CPC) bidding works. By introducing eCPC bidding, they were able to take some load off the shoulders of advertisers.
The change allowed Google to dynamically adjust advertisers’ bids within a range of 30% if the AdWords algorithm believed a click was likely to lead to a conversion. Since it was introduced, eCPC bidding was used for new campaigns as the default bidding strategy, which in turn gave Google more control over bids.
What do the new changes mean?
Before the new changes, the eCPC automatic bidding strategy would increase an advertiser’s keywords bids by up to 30% if the AdWords algorithm noticed a click which may be more likely to convert. When automatically adjusting bids, the algorithm would take into account the time of day, users’ location, device, and browser, and before those, any manual bid adjustment.
With the new adjustments to eCPC, Google will be removing the 30% cap, aiming to help advertisers to gain more conversions. The new changes will not adjust bids based on device, and advertisers who have no conversion stats and those with strict CPC KPIs need to watch out.
While it is possible that advertisers will pay more than their maximum CPC for one click in eCPC bidding, Google says it will try to keep average CPC under maximum CPC bids. With the 30% cap removed, Google may become forceful in making automatic bid adjustments.
Also, Google may adjust advertisers’ bids for different demographics, similar audiences, and remarketing audiences. Regarding bids for different locations, if Google’s AdWords algorithms find local markets with higher conversion rates, your bids for that location will automatically be adjusted.
For advertisers using eCPC with excellent results, it is recommended to test for some time and see how the new changes affect conversion rate, average CPC, and impression share.