We’ve received a few requests to cover the difference between enhanced cost-per-click and CPA bidding. Both use Google Ads data, which there is quite a lot of, to better spend your budget and hit your goals. But what makes them different?
Beyond standard CPC bidding, Google Ads lets you choose two advanced options, enhanced cost-per-click and CPA bidding. Both options use Google Ads data, which there is quite a lot of, to better spend your budget and hit your goals. This post serves as a primer to the bidding types. Secondly, I want to cover some of the ways in which enhanced campaigns have an effect on these bidding methods.
Update: Since this blog was originally written, Google has launched a large variety of automated bidding strategies that have replaced the older CPA Bidding strategy. Here are some more recent blog posts that give an overview of these new strategies and some successes our team has had.
- Automated Bidding Strategies by the Numbers
- A Case for Automated Bidding
- Most Common Mistakes of Automated Bidding
- Latest Bing Ads Automated Bidding Strategies
What is Enhanced Cost Per Click?
Enhanced cost-per-click increases your bids to be more competitive in select auctions. Sorry if you got your hopes up. Enhanced does not enhance them in a magical way but more of a steroid-era type way, to compare it to baseball.
In auctions that are more likely to result in a conversion, Google can bump up your bids by up to 30% of your max CPC for a keyword. Continuing the baseball metaphor, when the batter is more likely to hit home runs, out come the needles and in go the steroids. (I know this does not exactly work, so maybe blood doping in cycling is a more fitting comparison).
All of this is based on Google’s aggregated account data using patterns found in past performance, if similar auctions lead to conversions in the past you can count on Google to push your bids up accordingly.
Sometimes enough is enough though and you can’t afford to bid too high. The 30% max CPC gives you a bit of protection from overspending. This is especially important for verticals in which your competitors have much bigger budgets or much high max CPC’s. Thus, you won’t get dragged into any auctions that force you to go all-in, overspending by a wide margin. This keeps micromanagement down while letting the account manager keep some control over bids.
What is the Conversion Optimizer?
Conversion optimizer is a different sort of game when it comes to bidding. Rather than juice your bids when the competition heats up, it takes your account data and takes over all bidding for you. Rather than PED’s, which enhance what you already have, CPA bidding goes into SkyNet territory. This option can serve as a powerful asset in getting conversions at your defined goals.
As long as you have conversion tracking set up in your account – why wouldn’t you? – and 15 conversions over the last 30 days, Google will take the reins for you and manage around your defined CPA goal. This has the great benefit of reducing a lot of the maintenance done on an account. Imagine the possibilities, with less micromanaging, you to really focus on expressing yourself through keyword research and ad copy. It is not a set and forget though.
I recently took on a new client who used CPA bidding with a lot of success in the past. While auditing some keywords, it was clear the algorithm isn’t perfect. There were keywords that spent three, four, and five times the CPA goal with no conversions. This is not to scare you off; I’ve seen plenty of instances where CPA bidding works amazingly. Just keep in mind that you will have to do some baby-sitting. Little things will slip through that you will have to catch yourself.
Which Should You Use?
That is a question that is up to you and your account as well as the level of control you need. Enhanced CPC still basically functions the same as standard bidding with an added boost at specific moments. You’ll have a lot more control over your bids than a fully automated solution while still having the ability to make up small differences in bids at auction time.
Power users or those with complicated accounts will find this method best. Let’s face it, giving up an account you’ve worked very hard on is tough to do mentally -and depending on your stability, emotionally as well.
CPA bidding offers the ability to manage to your CPA goals, which is great for lead generation. Do you have a solid account that just needs to be managed to a certain cost? CPA bidding is calling to you.
Of course there are downsides. Seasonality or poor performance periods could cause the system to pause parts of your campaign cutting into your total conversions. The seasonality may also cause some instability in your account without enough time for the system to react, causing declining conversions and increasing CPA’s. If you’d like to read a story about falling in and out of love with CPA bidding check out a Deeper Understanding of CPA Bidding.
We’ve also seen some metrics have major impacts on performance of these new automated bidding strategies. Target CPA bidding can limit the number of impressions one generates because Google doesn’t think those auctions are profitable. Target CPA is great if you’re in a space with massive amounts of auctions and you want some stability. Maximize conversions works best with a limited budget and a low impression share. That gives Google the opportunity to pick and choose the best auctions to enter because the system doesn’t look to meet any CPA goal. An automated strategy isn’t going to magically fix any problems you have. Taking stock of certain parameters will give you the best opportunities for success.
Post originally published in August 2013 and updated by Mike Matta.