Conversions are everything when it comes to paid search engine marketing. When it comes down to it, the health of your conversion rates and cost per conversion can mean the difference between success and failure.
Search marketers who don't track conversion data and incorporate it into their campaign management are tempting failure.
For SEMs using AdWords, Google is now making it easier to automatically incorporate conversion data into campaign management using a Conversion Optimizer tool that is now available to AdWords advertisers who have used Google's Conversion Tracking tool and who have tracked at least 30 conversions in the last 30 days.
Previously, Conversion Optimizer was only available to a limited audience. Google suggests that new users of Conversion Tracking wait at least two weeks before enabling Conversion Optimizer since the more historical data that is available, the better it should perform.
Google explains how Conversion Optimizer works:
With the Conversion Optimizer, you bid using a maximum CPA, which is the most you're willing to pay for each conversion (such as a purchase or signup). Using historical information about your campaign, the Conversion Optimizer automatically finds the optimal equivalent cost-per-click (CPC) bid for your ad each time it's eligible to appear. You still pay per click, but you no longer need to adjust your bids manually to reach your CPA goals and can benefit from improved ROI.
To calculate the optimal equivalent CPC bid, the Conversion Optimizer first calculates a predicted conversion rate for each auction. The Conversion Optimizer takes many factors into account, including your ad's conversion history, the keyword's broad match query, the user's location, and the conversion rates of Google's search and content partner sites. The feature then generates an ad rank by combining your CPA bid, quality score and predicted conversion rate.
The system also helps determine which keywords are performing best. For instance, if you are selling watches and it determines that your ads for 'rolex' are converting better than your ads for 'movado', it will automatically adjust the bids so that your more profitable Rolex campaign appears higher and your less profitable Movado campaign appears lower on their respective pages.
Needless to say, this is useful stuff and even though many SEMs already manage campaigns using a similar methodology, the ability to automate this has value. It should especially encourage smaller advertisers who aren't so sophisticated to adopt these sorts of practices.
Google claims that "Many advertisers using Conversion Optimizer have achieved double-digit percentage increases in conversions, while paying the same price or less for each conversion" and if that becomes the case across the board, Conversion Optimizer could become a must-use tool for AdWords advertisers.