Google Adds Preferred Cost Bidding To AdWords
This new, global option allows advertisers to specify the average price they would like to pay per click (preferred CPC) or per thousand impressions (preferred CPM), as opposed to a maximum bid.
According to the AdWords Help Center, the preferred cost bidding system works best for advertisers who "are aware of how much each click or impression is worth to their business," and "want their AdWords advertising costs to be more consistent," among other factors. The feature also serves as a time-saver, freeing advertisers from having to constantly adjust their maximum bids.
It may be best for site owners that can contend with a possible shift in conversion rates, however, as the preferred cost bidding system removes some control over ad positioning.
So if an advertiser targets a $5 preferred CPC, the AdWords system may place an ad "in a range of positions" as it works to get that preferred cost, according to Google.
The option will be available to all advertisers by the end of the week, but in the blogosphere, discussions about the merits and flaws of this new feature, as well as how much control it really affords advertisers have begun.
On Clicks2Customers, one view was "to stay with the existing bidding model, until more research is done on this new option and the implications of it on advertisers." While on SearchEngineWatch, a blogger said "only time and testing will tell for many advertisers."
While advertisers with SEM experience may prefer to micromanage their ads, 'preferred cost bidding' seems to be a viable option for those who have don't have the time or budget to actively manage an AdWords campaign.