Google recently announced a big change to their enhanced CPC bidding system – the gradual removal of the +30% cap on maximum bids. So how will this affect your business and what should you expect to see change in your Adwords performance?
What is changing?
At the moment, Adwords can adjust bid prices by anything from -100% to +30%. However, from early June 2017 the +30% cap will be removed to allow Adwords to push harder for ad placements which have a higher likelihood of conversion (and to push less on those with a lower likelihood). This means that it will have the power to bid more exclusively for more qualified traffic, with the aim of gaining more conversions while maintaining the same CPA as with manual bidding.
How will your Adwords performance change?
The biggest change you should expect to see will be your average CPC. The removal of the +30% cap indicates that Google will opt for more aggressive bidding where possible, therefore an increase in average CPC is likely. However, Google have stated that they will maintain the average CPC below the bid price you set, so you will still be in control of the overall spend. If Google uses its new strategy effectively, this change should lead to a higher conversion rate while still maintaining your CPA!
Google have also stated that the changes will eliminate the need for several bid adjustments (e.g. RLSA, location and time). However, they still recommends using device bid adjustments as this will not be taken into account by the changes.
What should stay the same?
In addition to your CPA staying the same, this change will not affect your set max. CPC bid. Although Google might adjust your actual bid during the Adwords auction, this won’t change the bid you set in Adwords. You can still make performance-based bid adjustments as usual, and Google should keep your average CPC below your maximum bid.
How can this change work for your business?
Google recommends that (particularly during the changeover period) performance and bid adjustments should be monitored closely. Additional adjustments to your bids may be necessary during this time. Although the changeover period may present some initial challenges, overall the change should be a positive one and one which improves your long-term Adwords performance.