The nice folks in the Google-Plex semi-quietly released another feature this week, the ability to have Adwords automatically adjust your bids with the aim of attaining target ‘cost per acquisition’ numbers. In other words, you tell Google that you’ll pay $10 for every diamond-covered pretzel pendant you can sell, and they’ll automatically raise and lower your bids so that your average cost for each completed sale is no more than $10. Sound goods doesn’t it?

It’s a great idea, but there are caveats:

1. You have to have Google Conversion Tracking enabled, meaning that you’re willing to share with Google exactly what you sell, when you sell it, and for how much. Many people who aren’t normally paranoid believe that allowing Google to amass such a clear picture of how your business economically functions (and perhaps worse all businesses in your and other categories) isn’t the best way in the world to help them avoid the temptation to ‘be evil’.
2. You need to have at least 300 conversions per campaign, which must be the level at which they believe the data achieves statistical significance. Depending on your business and campaign structure, this may require you wait some time after enableing Conversion Tracking before the Optimizer can kick in.
3. Not surprisingly “It’s important to note that the maximum CPA bid is not a guaranteed limit. If your actual conversion rate is lower than the Conversion Optimizer predicts, your actual CPA may exceed your maximum CPA bid.” This just means that the GO can’t perform miracles, but it also rather limits their psychological and other liability too.

Andrew at Traffick gave it a try, and wasn’t impressed. Obviously it’s early, self-described as beta, and they’ll tune and improve.

In describing this new feature, Google says the following:

To determine when to show your ads, the Conversion Optimizer predicts a conversion rate for your ads every time they’re eligible to appear. This prediction is based on various factors. For example, here are some of the factors that affect the conversion rate on Kim’s custom shirt website:

• The search query. Kim’s conversion rate is higher when users search for custom shirts than when they search for shirts.
• The location of the user. Her conversion rate is highest when her ad shows in New York.
• The conversion history of particular sites. When her ad shows on certain types of content sites in the Google Network, Kim is more likely to get conversions.

Kim doesn’t have access to these details, but they directly affect her conversion rate and costs. By considering these factors every time her ads are eligible to appear, the Conversion Optimizer can show her ads when she’s more likely to get conversions.

Most interesting to me was the quote “Kim doesn’t have access to these details”. So Google is making decisions based on information they DO NOT provide to you as a typical adwords user. That isn’t right. Adwords users should have full access, via the API to anything that can enable them to make better decisions on their own. Retaining data to give advantage to Google tools over those from 3rd parties prevents Adwords customers from getting best-in-breed tools and having full choice and control over their accounts.

Google already does this with Google Analytics, enabling it to show things like which ads were placed on the top and which were run in the right column – an important fact not shared in any other report or data feed. Let’s hope this trend of selective disclosure gets cleaned up soon.