Newly Released Google AdWords Optimize for Conversions Ad Setting Now LIVE: What Does it Mean for Your AdWords Campaigns?

I’m always a little skeptical about new AdWords features as you never know who is being presented with a great opportunity when Google rolls out a new feature. But every so often Google rolls something out that seems to be a direct answer to advertiser demand, like:

• Modified Broad Match
• AdWords Campaign Experiments (ACE)
• AdWords Automated Rules
• AdWords Call Metrics

You get the idea: not everything Google does seems to be aimed at maximizing clicks and revenues. Today we see (what appears on the surface to be) just such a feature. Google is rolling out a new “optimize for conversions” setting for your Google ads. From the AdWords blog:

Show ads that are most likely to receive conversions more often

Today we’re announcing the launch of a new ad rotation setting in AdWords that allows you to optimize for conversions. Previously, you had two options:

Optimize for clicks: Ads that are expected to provide more clicks are shown more often

Rotate: Ads are shown more evenly

Now, with a third option, you can choose to show ads that are expected to provide more conversions more often.

We’ve always encouraged you to test multiple ads in each ad group, and we’ve offered our help by showing ads with the highest clickthrough rates more often. However, some of you have told us that the ad with the highest clickthrough rate isn’t always the ad with the highest conversion rate and that you’d like to be able to optimize for conversions rather than clicks. Starting today, we’re allowing you to do just that.

To use the new setting, you’ll need to have Conversion Tracking in your account, as we use the data from that tool to determine which ad is the most likely to receive conversions. When we don’t have enough data to make a decision, we’ll show the ad that is the most likely to receive clicks. If you have Conversion Tracking, the Optimize for conversions option will be available in the Ad delivery: Ad rotation, frequency capping section under Advanced settings on the Settings tab of any campaign. Once enabled, it will apply to all ads that appear on Google and our search and display partners’ sites.

Let’s take a look at how to use this new feature, then we’ll talk about what it means to you.

How to Set Up Optimize for Conversions

It’s very simple to change the setting for your ads to optimize for conversion. Simply navigate to the campaign settings tab and scroll all the way down to “advanced settings” (ah! There’s the Google we know and love: the setting is very “advanced” — if you are not yet at the level of wanting to drive more business, leave it to Google to get you lots of traffic!).

At any rate within that advanced settings section way down the bottom of the page you’re able to optimize your ad rotation for conversion:

• Expand the ad delivery section in advanced settings
• Edit ad rotation
• Select “Optimize for Conversions“

Here is a quick example:

And to change the settings in multiple campaigns at once to the optimize for conversions setting you can:

1. Navigate to a view of “All online campaigns” in your AdWords campaign
2. Toggle to the settings tab
3. Check the campaigns you want to change
4. Make sure you have “ad rotation” showing as a column (if not click the columns drop down and customize columns)
5. Click Edit Settings
6. Choose the optimize (conversions) setting and copy to all relevant campaigns

There’s even a handy copy to all rows functionality:

So now you know how to use the optimize for conversions ad setting in AdWords — the question then becomes: should you?

Optimizing Ads for Conversions: What Could Go Wrong, Right?

This certainly throws a wrinkle in the old rotate versus optimize debate. So let’s take a look at some early pros and cons for optimizing for conversions.

Pros

1. Google does the work for you of optimizing your ad text to conversion data rather than CTR.
2. As they do with Enhanced CPC and Conversion Optimizer, Google is likely making use of data you aren’t even privy to.

At first blush the benefits seem pretty obvious and even appear to outweigh the potential negatives, but there’s a bit more to the decision to use this setting than meets the eye.

Cons

• You aren’t able to associate a target CPA with this setting — in other words, Google will go and get you as many conversions as it can with no regard for how much those conversions are costing you. This is a huge one.
• The setting disregards Quality Score — by optimizing for conversions rather than click-through rate you are ceding an important decision to Google: whether you want to opt for an ad with a higher CTR that in turn will allow you to choose whether you pay more for a higher volume of conversions or opt for fewer conversions which convert more efficiently.
• You might not have enough conversion data or your conversion tracking might be somewhat flawed — in these instances it may make more sense to use the rotate setting to hand-evaluate the effectiveness of an ad, or you might even be better off just optimizing for click-through rate and in turn Quality Score.

This is an important thing to note, so I’ll try to draw out the potential pitfall here with a simple example:

• You can afford to spend $5 per sale on advertising and remain profitable
• Ad A may drive 20 conversions at a cost-per conversion of $7
• Ad B may drive 18 conversions at a cost of $3

Based on Google’s initial description of this feature we’re allowing google to pick Ad A, which actually causes us to lose $40, whereas Ad B would have netted us a profit of $36 dollars.

They’ve optimized us right out of $76!

So What Should You Do?

As with any AdWords feature: proceed with caution and weigh the costs and benefits. If you have a very high margin product and limited resources for managing your campaigns and optimizing ad text, this setting could be useful. For many dedicated PPC campaign managers, however, it may make more sense to stick with the “rotate” setting.

Think about what makes the most sense for your business, and monitor your results closely!