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What's happening to preferred cost bidding?
Preferred cost bidding is being retired as a bidding option for AdWords campaigns. The end of preferred cost bidding will come on January 26th, 2009.
As of right now, preferred cost bidding is still running in existing campaigns where it has already been selected. But it is no longer an available option when advertisers switch bidding types or create a new campaign. On January 26th, preferred cost bidding will disappear completely, and all existing campaigns still using it will have to switch to different bidding formats.
We're ending preferred cost bidding because we've found it is used by only a very small fraction of AdWords advertisers. We'd like to keep every possible option, of course, but we've found that having too many options can be as confusing and frustrating to users as having too few. Also, every separate bidding option adds significant complexity to the AdWords code. Removing a lightly-used option will help us keep AdWords as simple, fast, and flexible as possible for everyone.
If none of your campaigns use preferred cost bidding, you don't need to do a thing. This change won't affect your account at all.
If you do have campaigns with preferred cost bidding, Conversion Optimizer and Budget Optimizer are good alternate bidding solutions. Conversion Optimizer is especially good for those focused on conversions and return on investment, and Budget Optimizer is helpful for smaller users who want to get the maximum number of clicks on a fixed budget. Learn more about these bidding options.
You should make plans to switch any preferred cost bidding campaigns to Budget Optimizer or Conversion Optimizer, or to manual bidding, before January 26, 2009. Learn how to change your bidding strategy.
If you take no action in your existing preferred cost bidding campaigns by January 26th, those campaigns will switch automatically to manual bidding. Your campaign's current bid values, as set by preferred cost bidding, will be converted to Max CPC or Max CPM bids instead. From then on you'll need to change your bids manually; the system will stop updating your bids to reach your average CPC or average CPM goals.
Also, please note that once preferred cost bidding ends, the preferred bids you set for those campaigns will no longer be available in your account. You can export your campaign statistics to your own computer now, using these instructions.
Google's CPCs have been falling significantly over the past 6 months as advertisers react to the lowered conversion value in their traffic, itself a function of the worsening macroeconomic situation; this is something Google has never seen before, and it's part of the reason Google's stock is down 60% from its highs.
Might this change be because preferred cost bidding gives advertisers too much control over their CPCs? I think that's a much more likely scenario than the one Google gives.
For most advertisers - it's my absolute favorite bidding type.
The risk threshold between having to bid $15 to pay $3 is way too high - especially because you might actually pay that one day. Preferred cost bidding was a perfect bid type for all of those advertisers.
I wish Google would change this decision. When I talk to people about this bid type and help them understand it; most actually want to use it to mitigate those bid risks.