AdWords users will notice that there is a new alert in their accounts that will notify them of changes to Enhanced CPC bidding.

The notice says, “Enhanced CPC (ECPC) bidding now has more flexibility when adjusting your bids to help you get more conversions.”  With Enhanced CPC (ECPC), manual bids will be automatically adjusted based on how likely a click is estimated to convert.  The bid flexibility of ECPCs has been bound by the max CPC and would only increase a bid 30 percent above the Max CPC.

With this change, that bid cap is no more.

AdWords will now automatically adjust ECPCs “to fully account for differences in conversion rates across dimensions like audience and location.”  Since ECPC automatically takes location and audience targeting into account, advertisers aren’t going to have to set bid adjustments any more to account for the dimensions manually.

ECPC doesn’t take device into account, which is interesting.  It’s suggested by Google that advertisers may still want to use device bid adjustments.

What happens when it comes to managing CPCs if the upper cap is removed?  According to Google, the system will try to keep average CPCs below the max CPC “over time.”  It’s possible that advertisers could see different outcomes depending on campaign type as a result of these changes:

  • Search & Display: The ECPC setting will aim to increase conversions at the same cost per conversion. That means there could be changes in spend.
  • Shopping: ECPC will aim to increase conversions at the same overall spend. That means advertisers could see CPA changes.

Here is the full explanation of the changes on the AdWords support page:

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