Google Adwords introduces Preferred Cost Bidding

Posted on April 26th, 2007 in Paid Search.

You should be familiar with Max CPC feature in google adwords before diving into preferred cost bidding. When you set a maximum CPC, you are telling google to give you the highest possible position that you can get for the Max CPC you specified. So the actual/average CPC charged will be less than or equal to your Max CPC.

Now lets say all you care about is the average CPC, thats when you go for the preferred cost bidding. Now when you specify a Preferred CPC, you are telling google to place your ad in a range of positions higher/lower than the highest possible position you could get for your preferred CPC.

So when is choosing preferred CPC the right approach and when is it not?

When you run campaigns where all you care about is the traffic/clicks and not the actual conversions, preferred CPC is a good option.
When you want to test what will be the performance of your campaigns when you bid above or below the actual CPC that you can afford, preferred CPC is a good option.
However be cautious about running campaigns solely based on CPC, because most of the times it is about conversions than clicks.

This kind of bidding options and some advanced techniques are already available with the bid management tools. Google’s focus is on mass marketing, and the bid management tools will have their own marketplace.

With the toolset additions to google adwords like the google analytics, budget optimizer, position preference, preferred cost bidding, website optimizer, pay per action it wouldnt be a surprise if google came up with a simplified bid management tool that incorporates otpimization based on conversion/ROI/ROAS.

Follow the link for more detailed explanation of preferred cost bidding