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Today Google announced their newest feature for Google AdWords, Enhanced CPC.  According to Google, this new tool is designed to help automate the keyword bidding process while improving a campaigns ROI.  Enhanced CPC utilizes the historical data of a keyword to automatically adjust the CPC (up to 30% above max CPC) of that keyword based on the likelyhood that it will convert.  Spending more money on keywords that convert and less money on keywords that don't convert should lead to one conclusion, increased ROI.

How It Works

Here is an example: lets say you are bidding on the keywords fast widgets, very fast widgets, and widget speed, all with a max CPC of $1.00.  Because it has a historically high conversion rate, when the keyword very fast widget triggers an ad AdWords will automatically recognize the conversion history and increase the bid up to $1.30 for this search.  Additionally, when a keyword which has not converted well in the past, widget speed, triggers an ad, AdWords may lower the bid to as low as $0.70.  By adjusting keyword bids based on their conversion history, campaign can achieve more conversions at a similar if not lower average CPC.

Here are a few examples of what Enhanced CPC can do:

• Adjust your bid depending on how well a particular search or display network partner site in the Google network has converted for you in the past
• Recognize when specific words within a keyword (e.g. ' kits ') convert well and adjust your bid when users search on variations of these terms (e.g. ' model airplane kits for children ')
• Detect attributes such as the user's location, language settings, browser, and operating system and analyze how these attributes may impact the likelihood of your ad converting

Will It Work?

Google is consistently introducting and tweaking their AdWords platform.  Just like any change google makes, I am certain this new feature has gone through some pretty serious testing.  It will be interesting, however, to give this new feature a try.  Within the next month we should start to see the results coming in as Pay Per Click managers begin to test this feature.  Only time will tell.