Google's phase out of Enhanced Cost-Per Click: What does this mean for your strategy?

In a significant move, Google has announced that it will begin phasing out Enhanced Cost-Per-Click (ECPC) starting in October 2024, with plans to fully transition all remaining campaigns to manual CPC by March 2025. This shift will impact advertisers across Search and Display campaigns, and it’s crucial for businesses to understand what this means and how to adjust their strategies accordingly.

What is Enhanced CPC?

Enhanced CPC has been a long-time favourite among advertisers seeking a middle ground between manual and automated bidding strategies. It allows Google to automatically adjust your bids in real time based on the likelihood of a click leading to a conversion. The goal is to drive more conversions at a similar cost per click.

“Enhanced cost per click (ECPC) helps you get more conversions from manual bidding. ECPC works by automatically adjusting your manual bids for clicks that seem more or less likely to lead to a sale or conversion on your website.”

Google Ads Help

How does ECPC work?

“Available as an optional feature with Manual CPC bidding, ECPC is a form of Smart Bidding that uses a wide range of auction-time signals such as browser, location and time of day to tailor bids to the unique context of each search, but not to the full extent of other Smart Bidding strategies, such as target CPA and target ROAS.”

• Google Ads Help

 Why is Google Phasing It Out?

Google’s focus on automation and smart bidding strategies has grown steadily in recent years. As machine learning and AI have advanced, Google has introduced more sophisticated bidding options, such as Target CPA (Cost-Per-Acquisition) and Target ROAS (Return on Ad Spend), which aim to optimise campaigns more effectively than ECPC.

By phasing out ECPC, Google is nudging advertisers toward fully manual bidding or more advanced automated strategies. This aligns with their broader push for more efficient and performance-driven advertising options.

 Key Timeline:

- October 2024: Google will stop offering ECPC as an option for new Search and Display campaigns.

- March 2025: Complete transition to manual CPC for all campaigns still using ECPC.

 What Should Advertisers Do?

1. Audit Your Campaigns: Identify which of your current campaigns rely on ECPC. Plan to transition them to either manual CPC or another smart bidding strategy before the March 2025 deadline.
2.  Consider Smart Bidding: Google’s automated bidding strategies, like Target CPA or Target ROAS, have proven effective for many advertisers. Depending on your business goals, transitioning to one of these strategies could be beneficial.
3. Monitor Performance Closely: If you choose to stick with manual CPC, pay close attention to your campaign performance. Without the real-time adjustments ECPC provided, you’ll need to be more hands-on with bid adjustments to maintain efficiency.

 How 26PMX Is Helping Clients Adapt:

If you haven't started testing automated bid strategies yet, now is the time. Enhanced CPC for search and display campaigns will be phased out by March 2025, leaving advertisers with two main options:

1. Manual CPC
2. Smart bidding strategies

Depending on your client's goals and objectives, various smart bidding strategies are available to help you meet performance targets.

If your goal is revenue or profit, start testing the Maximise Conversion Value (tROAS) strategy. There are also smart bidding strategies designed to maximise conversions (tCPA) or clicks. Consider using campaign experiments for more scientific A/B testing to monitor the real impact of smart bidding compared to manual CPC.

Smart bidding has improved significantly over the years: it now considers hundreds of different intent/bidding signals in real time, which no human could manage manually for each individual search.

Smart bidding reacts to performance fluctuations, whilst still maintaining control by adjusting targets at the portfolio, campaign, or ad group level. You can also apply seasonal bid adjustments to inform smart bidding of expected changes in conversion rates such as a sale period, and you can use data exclusion events when appropriate.

For advertisers who prefer more control, manual CPC is still an option (at least for now). It's well known in the industry that, for brand campaigns specifically, smart bidding strategies like tROAS or tCPA can sometimes inflate CPCs without delivering incremental performance. For these reasons, it’s essential to monitor performance closely. You may want to keep more focused, predictable campaigns, such as brand campaigns, on manual CPC. This ensures that you minimise wasted spend and allows you to maximise investment in other, more generic campaigns.

For advertisers transitioning from a more manual approach to smart bidding, it’s important to ensure your accounts are AI and automation friendly. Review your campaign structure and consider a more consolidated account with fewer campaigns and ad groups. This allows smart bidding to utilise more data to make informed decisions and meet minimum conversion thresholds. If campaigns share the same objectives and goals, excessive segmentation isn't necessary.

Leverage smart bidding and broad match keywords to give AI the opportunity to identify search terms beyond the current exact and phrase match keyword coverage. Smart bidding can understand intent at the search term level—something manual CPC can't handle at that level of granularity. Smart bidding performs better with improved data signals, so make sure you're feeding AI with high-quality first-party data and audience signals to enhance its algorithms.

The key takeaway:

Remember, there is no one-size-fits-all solution. Optimisation and bidding decisions should be data driven. You may find that some campaigns and goals require a more manual approach, while others benefit from smart bidding.

Contact us today to learn how we can help future-proof your ad campaigns. Visit: https://26pmx.com/services/paid-media/