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AdWords Changes Continue: How Much Do You Want To Pay?

The AdWords crew announced a new wrinkle in the machine today.

They’ve introduced Preferred Cost Bidding. So now instead of choosing a maximum cost per click (CPC) you can choose to define a preferred CPC. Google will then go and manage your bids for you to ensure that that’s the amount you spend per click.

An interesting approach, I presume aimed at advertisers just starting out: this should make the whole experience less confusing for them & therefore easier to start using.

Of course it also makes the big G more cash!

Currently, let’s say you choose a maximum CPC of 83c for a keyword. If you write a targetted ad & send visitors to a decent (relevant & targetted) landing page, you’ll probably pay less that 83c, maybe a lot less depending on the quality & savvy of your competition. Let’s aassume the average discount (because most advertisers aren’t that smart) is 10%.

I would imagine that many new advertisers will take the advice of the (wonderfully erratic) bidding suggestions that Google gives. If that number stays at the same level, Google just made an instant extra profit of 10%

Ok, not quite that much, those advertisers already hitting their daily budgets won’t be able to spend any more cash – but many people will.

Even if it’s only 4% extra, that’s an additional $128m per quarter in revenue that goes straight to the bottom line! And as ever, they make these changes at the start of the quarter, so they get maximum impact on next quarter’s results… but I digress.

I’ll keep you updated as I learn more – Preferred Bidding isn’t an option as yet on Australian accounts. Stay tuned, it should only be a few days.

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