What bidding option on adwords provides the most conversions for cost?

This is a non tech small business marketing question but hopefully you guys don't mind. If you do I guess it will be closed down.

My wife has started a small cake business in London: Art of Sumptuous Cakes

We have very small advertising budget but virtually all our business comes from Google adwords. Of the bidding options available what is the best choice for a business like ours?

[A] Focus on clicks - manual bidding. Have tried this with auto adjustment for when a keyword was not first page but frequently hit the daily budget quickly

[B] Focus on clicks - automatic bidding - started with this, high number of clicks but not many conversions

[C] Focus on conversions - have just started using this method as we are starting to collect conversion data. Having tried direct online purchase, it was not successful. People ordering cakes seem want to have a conversation via email / phone, so defined our conversion as form submit on the Contact Us page. Bit worried this option does not seem to provide as many clicks and can use up the daily budget quite quickly. Advice on whether the Max CPA or Target CPA is the better option

Have started to gather data on all three and is that just the best option? There doesn't appear to be a way to A/B test bidding options so run each for a month at a time with the same keywords and AD's and just measure conversions?

I'm rusty with Adwords, but if you're asking that question I'm pretty sure you're not using your budget efficiently. Standard settings tend to err on the side of more money for Google.

Manual is best - but once you know what you're doing.

Here's some resources that will help:

• PPC Hero Ugly website, but good
  information
• PPC Blog Good for background
• Search Engine Watch PPC
• Free Adwords Intro ebook Basic
  intro from the author of The Winning
  Guide to Adwords

If you're burning the budget too fast, try the following:

• Exclude your own domain - people who search for artofsumptuouscakes already know who you are, so don't need to be paid for.
• Consider excluding idle interest searches you may be getting - "birthday cake ideas" "birthday cake jpeg" "football cake pictures" and the like.
• Consider focussing on money out searches - "buy birthday cake" "buy novelty cake" etc
• Try and find lower volume searches where the bid price will be cheaper - for example "buy birthday cake chelsea" for wherever you're based, then surrounding areas etc.

Your logs and conversions will tell you which are costing you. Often excluding has most effect as you trim those who aren't going to convert, so your budget runs the campaign for longer.

Once you have some active bids running, and your click through rate goes up, try dropping the amount - bid price isn't the only thing deciding your ad placement. Click through rate, bounce rate and site "quality" have an effect too. So regularly tune your pricing, or you'll end up overpaying.

You might have got more current info over on ProWebmasters.

Here is how I would advise handling AdWords:

1. Make a list of your best buying phrases and choose the best phrase according to likely commercial intent (how likely someone will be to be in the buying mood given what they are searching for), competition (cost-per-click), and local search popularity (how many people are searching for the term in your area). In order of importance, it should be commercial intent, popularity, and then competition. It's important to start with only one key phrase, but keep your list for later use.
2. Exclude all ad locations except for those appearing on the search engine results pages (SERPs). It's not that website ads don't work, it's just that SERPs give you more information and you can control the exact phrase you want to be found under.
3. Since you're also a local business, make sure that you aren't appearing under global results. You'll want to limit appearing to your potential delivery area. You might want to include a city or area name in your search phrase.
4. AdWords also allows you to do broad or exact matches. A broad match will display your ad if your target words appear in the search query, no matter what else in the query or in what order the words appear. You don't want broad match, you want to control absolutely every aspect of your ad, so you should select exact match which will cause your ad to appear under the exact phrase that you enter.
5. It looks like you're already doing
   this, but always set a daily budget.
6. Always bid for the first spot. It converts at a higher rate and because of Google's bid system, you will very rarely end up paying the full price of your bid.
7. The whole point of your ad should be
   to get the user to click on the
   link. The title should include the
   search phrase but should also make
   sense grammatically and be
   compelling. The description should
   give further incentive to click on
   the title. Everything you've ever
   heard or read about link bait and
   viral content (disclosure: a tutorial on my site) can be applied
   here.
8. Now it's time to begin testing the ad. To do this, you need to have several versions for the same keyword phrase, testing out different combinations of titles and descriptions. What you're testing here is which has the best click-through rate (CTR). Once you've established a winner, use that as your control group against which you'll test the performance of future ads for the same keyword phrase.
9. Your landing page should match the promise of your ad. In fact, you should use the same wording. Don't surprise the user in any way or you'll lose the conversion. Your landing page should have one testable action that you want the user to perform when they get there. The number of users that arrive at your page from the ad divided by the number that perform your action is your conversion rate.
10. Just like you tested different ad variations, you should also test various landing pages. Test copy, images, colors, and even your offer.
11. You should test both your CTR and your conversion rates simultaneously and continuously until your campaign becomes profitable. Then, test more variations to see if you can make it more profitable.
12. It's important to understand that you're going to need a budget for testing. There really isn't any way around this, but the good news is that when you're done testing a campaign, it should be profitable. Once you've made one campaign profitable and you're positive that for every X dollars you put into advertising, you'll get X+Y dollars back, turn up the budget. Then, move on to the next keyword phrase. Rinse, repeat.