The Google AdWords blog announced a new bidding method available to advertisers named enhanced CPC.

Enhanced CPC uses your conversion data, the one you may willing provide to Google AdWords, to automatically adjust your Max CPC prices. The system predicts the likelihood of an ad converting based on the historical conversion tracking data in your account. Google said using this bidding option will result in “more conversions while maintaining or reducing your overall CPA.”

Why use this? Google gives three ways it helps:

• Adjust your bid depending on how well a particular search or display network partner site in the Google network has converted for you in the past
• Recognize when specific words within a keyword (e.g. ‘printer’) convert well and adjust your bid when users search on variations of these terms (e.g. ‘best canon printer in singapore’)
• Detect attributes such as the user’s language settings, location,operating system , and browser and analyze how these attributes may impact the likelihood of your ad converting

To turn this feature on, you need conversion tracking enabled and then go to the the ‘Bidding and Budgeting’ section of the settings tab for your campaign, and select the checkbox under ‘Enhanced CPC.’

Here is a video demo: