Getting a Little Help with Your Bids – ECPC Versus CPA Bidding
August 8, 2013
We’ve received a few requests to cover the difference between enhanced cost-per-click and CPA bidding. Both use AdWords 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, AdWords lets you choose two advanced options, enhanced cost-per-click and CPA bidding. Both options use AdWords 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.
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 homeruns, out come the needles and in go the steroids. (I know this does not exactly work, so maybe blood doping in cycling is 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 Sean’s post here.
What About Those New Fangled Enhanced Campaigns?
There is something called enhanced campaigns coming to an account near you. You may see a notification for it in your interface. Go ahead and switch over once it tells you, I hear it’s a lot of fun, and enhanced is better than standard, right?
Enhanced campaigns have actually given me quite a few adventures since migrating into this strange new world. Now that the multi-device world is being recognized in AdWords (hooray for diversity?), campaigns target all devices.
That means you can’t hide your campaign’s money from other devices. Ideally this makes it easier to manage everything from a single campaign using sliders when needed. No need to have multiple device specific campaigns for you flux capacitors. All you have to do it set one solitary bid per keyword and increment/decrement percentage wise across mobile. But little did Google know, flux capacitors are really hot on mobile but tablet users never buy them.
With all devices now grouped together you have to really believe in the algorithms to sort and understand the differences across device type. It’s at its worst if your primary customers are not desktop users – which form the foundation of bidding – so I take back my hooray for diversity and equal rights in every campaign.
Talking to colleagues and from my own experience, CPA bidding has not shown much promise in differentiating between devices. I won’t say that the system is necessarily horrible in this new multi-device world in which we were ushered in to, but it is inefficient in many cases. The system can even fool you at a higher level as the campaign average comes out to close enough to the CPA goal but when you segment by device, it is a little startling.
In the image below the CPA bidding was aiming for $7-$8 at the ad group level. Quite a bit off course here over the last 30 days, a heavy keyword audit helped but it is still not enough.
With the lack of headings below, you are looking at device, conversion totals, and CPA.
Combining devices made metrics trend in the wrong direction while using CPA bidding, making it harder to hit previously achievable goals in situations where devices perform very differently. What once worked well in this account while segmented by device is now spending too much money for each conversion.
Accounting for many conversions over time, the spend really adds up. Unfortunately there is no option to not bid on desktop in this situation or define a different CPA to help the system out. Of course future algorithm changes or the return of device segmentation may help but it is best to be wary as of now.
I hope this post helps clear up these bidding options and gives you some insight into what to expect, as well as when it is appropriate to use these methods. I can’t tell you what to do – after all, this is America not the Eastern Bloc – but I hope these anecdotes help you in making the right decision for you account. Farewell for today friends. Test away and happy bidding!
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