Google’s Conversion Optimizer – Another Nail in the Bid Management Coffin?

In previous blog posts and articles, I’ve predicted that PPC Bid Management software would eventually be rendered obsolete. Capabilities like dayparting and extensive conversion tracking/reporting, previously available only via expensive bid management packages, are now built into Google AdWords, Yahoo! Search Marketing and Microsoft adCenter.

Google’s about to roll out yet another monster AdWords feature: automation that manages bid prices to meet specific CPA (cost-per-action) goals. The capability will be rolled out to all advertisers who are now using AdWords’ conversion tracking capability – as early as next week.

Advertisers will be able to specify a target cost-per-action, and Google’s Conversion Optimizer will attempt to peg bid prices for all keywords such that a maximum number of conversions will be obtained, and the average cost per conversion will remain at or below the target cost-per-action.

Google goes the third-party bid management packages one better, though: it takes into consideration the searcher’s location and the site or search partner network where the advertiser’s ad appears. So, for example, if an advertiser’s products historically sell better in Atlanta when advertised on partner network, the Conversion Optimizer will adjust bid prices to show ads there more often.

We’ll report later on our experiences testing the Conversion Optimizer (fully described here). Meanwhile, we’ve gotta wonder how this will affect bid management software vendors like Doubleclick and Atlas. To thicken the plot, Atlas is owned by Microsoft as part of the aQuantive acquisition, and DoubleClick is slated to become part of Google when/if that acquisiton goes through.