Microsoft Advertising eCPC Update – No More Manual Bidding

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Microsoft Advertising eCPC Update – No More Manual Bidding

Rebecca Perlin, Olivia Ghiz, Justin Colbert, & Karen Cinpinski

What’s new? 

As automation comes to the forefront of Paid Search, Microsoft Advertising announced its most recent strategy for migrating towards the future of automated bidding, the latest effort to improve Microsoft’s product offering and compatibility with SA360. By April 30, 2021, all manual bidding for existing search, shopping, and Dynamic Search Ads campaigns will work with Enhanced cost per click (eCPC). The eCPC bid strategy uses machine learning and various intent signals to adjust cost-per-click (CPC). This level of automation helps maximize conversions while raising bids each time an ad is eligible to appear in situations that seem more likely for a click to lead to a conversion..

What does it mean?

Microsoft Advertising says that this change will “drive even more value from your campaigns” as eCPC has proven to increase conversions by 5-10% while also improving efficiency.  

Advertisers still have the ability to set the baseline max CPC (maximum amount you are willing to pay for a click) that they wish to achieve. With eCPC, bids will be adjusted in real time during each auction, leveraging 1st party user insights. eCPC will maintain a 7-day average CPC of the max CPC bid advertisers originally set. It is important to remember that while bids are adjusted during live auctions, they will be capped at the max CPC 7-day average. This algorithm can work for targeting different KPIs, including maximize clicks, maximize conversions and Target ROAS. For example, suppose you sell jackets both on your website and at a physical location, you’ve set your max CPC to $2, and you have eCPC bidding turned on. If you set the value of store visit conversions to be higher than visits to your website, and Microsoft sees an auction that looks likely to lead someone to a store visit, the automated bid strategy may reset your bid to $2.50 for that auction. If another auction looks likely to lead to a website visit instead of a store visit, eCPC might lower your bid to $1.50 for that auction.

Paid Search impact

The change’s impact will depend on the client’s KPIs and what strategies are currently being implemented from a bidding standpoint. Advertisers who utilize manual bidding will face the biggest adjustment, as that will no longer be an option. This aligns with the more recent and frequent push from search engines for advertisers to leverage automation within their paid search program. Microsoft assures advertisers that at no point will costs (per acquisition) increase as a result of the change, but the adjustment of setting the max CPC (within eCPC bid format) will need to be made within platform to accommodate. 

What should brands do about it?

Microsoft Advertising recommends that marketers start testing the automated bidding setup now through “Campaign Experiments”, and provide a decision tree (pictured below) to ensure advertisers find the best-fit automated bidding strategy for their campaigns. By implementing eCPC in conjunction with other strategies, users will be able to “stay on top of the dynamic marketplace,” according to Microsoft.

Our final take

For advertisers already using automated bidding, we don’t anticipate a major impact. If anything, advertisers already using SA360 bid strategies may even see a slight improvement in performance within Microsoft campaigns because of the additional signals from eCPC. If advertisers notice rising CPCs, manual intervention may be required. For instance,  measures such as temporarily capping daily budgets and manually decreasing max CPCs will bring down that 7-day average. Strong performance has been seen within Google automation—at times 15-30% increases to volume and efficiency, so we expect the same from Microsoft. Overall, this change was inevitable: both Google and Microsoft continue to push for automation. Agency expertise coupled with marketing savvy will be the ultimate complement to these advancements.

Rebecca Perlin, Olivia Ghiz, Justin Colbert, & Karen Cinpinski

Rebecca Perlin is an Analyst, Search Marketing; Olivia Ghiz is a Senior Analyst, Paid Search; Justin Colbert is a Manager, Paid Search; and Karen Cinpinski is VP/GD, Search Marketing

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