AdWords recently released a new bidding option under campaign settings called Enhanced CPC that uses your conversion data to optimize bids for ROI. Advertisers will reportedly benefit from spending less time on managing bids while receiving more conversions at an equal or lower ROI.
The way Enhanced CPC* works is that your keyword bids are automatically adjusted up or down depending on how an individual keyword converts for you. As a result you may pay up to 30% of your set bid. It’s a feature you can enable at the campaign settings page, and it applies to all the ad groups within the chosen campaign. If you’re uncomfortable paying more than your set Max CPC, you should probably not use Enhanced CPC.
Unlike with Conversion Optimizer, the other AdWords advanced ROI bidding option, you do not need 15 conversions in the past 30 days to use this. However, Conversion Optimizers allows you to set specific CPA goals, which Enhanced CPC does not offer. If you are looking to lower CPA significantly, then you might be better off using Conversion Optimizer, which has greater potential to help you improve CPA.
*Do note that if you enable Enhanced CPC you will not be able to make changes to your campaigns through AdWords Editor.