Target CPA Bid Strategy
In this blog, I’ll explain how Target CPA bidding works, and how this bidding strategy can help you get more value out of your Google Ads budget.
Let’s go over some terminology up front – the CPA in target CPA bidding stands for Cost Per Acquisition and acquisition is just another conversion word. As you might guess from the name, Target CPA bidding is best suited for advertisers who want to get more conversions at a specific cost per conversion.
Target CPA bidding sets bids for you to get as many conversions or actions as possible. In Target CPA when a user searches and the search fits your offering, Google uses Target CPA to set a bid based on the auction’s likelihood to convert.
This bidding strategy will be most helpful for campaigns that are tracking meaningful conversions – actions like donations, newsletter sign-ups, views of a thank you page, or significant time spent on your website.
Target CPA is a bit more advanced than maximize conversions bidding, and will work best for campaigns that have a significant amount of conversion volume. Ideally, you’re already getting around 15 conversions per month before you enable Target CPA. Otherwise, maximizing conversions might be a better fit.
You can apply the Target CPA bid strategy on a single campaign or as a portfolio strategy across multiple campaigns.
Target CPA bidding allows you to exceed the CPC cap and harnesses the power of Google machine learning to dynamically adjust bids for each user based on the likelihood that a user will convert. This means, your ads are reaching potential prospects that you might have missed due to having a low CPC cap.
The beauty of Google Ads is you only pay when your ads get clicked. In the event prospect does not click the ad, still you are getting the value of the prospect seeing your business ad. At least, the prospect knows that you exist and count on the list of possible vendors.
Google Ads keeps the average cost per conversion at the Target CPA value that you set based on how much a conversion is worth to you.
For example, if you choose a target CPA of $10, Google Ads will automatically set your cost-per-click bids to try to get you as many conversions as possible, if they average out to a cost of $10 each.
If you do not know what strategy is right for you, learn more about automated bidding strategies or reach out to me by visiting the contact page. I will review your website, landing pages, goals, and other info to determine the right bidding strategy.
Best Practices => Target CPA Bid Strategy
- Split campaign per platform i.e., Desktop and Mobile.
- Identify a reachable ROAS/CPA goal.
- Modify bid or budget once every 4 days.
- Set a reachable ROAS/CPA goal to prevent missing on opportunities.
- Start with a budget of at least 3 times your target CPA.
- For Target ROAS, start with a budget that can generate at least 8 conversions a week
- Increase budget gradually when you’re happy, decrease budget if your CPA/ROAS has reached a plateau.
- If you care more about spend than generating a specific CPA/ROAS, consider using Max Conversions.
Target CPA Explained Through an Example
Let’s use the example of a hypothetical nonprofit called San Jose Pet Shelter to explain how this works. Let’s say the pet shelter’s primary goal is to get users to schedule an appointment to come meet – and potentially adopt – some of the shelter’s pets.
They would have a Google Ads campaign focused on this, with conversion tracking set up to see how many users hit thank you page after clicking on an ad and setting up an appointment. If this campaign was averaging 10 appointments scheduled per week, and 40 per month, but not hitting its daily budget, it would be an excellent candidate to test target CPA bidding.
If each appointment scheduled is worth $20 to the shelter, they should set the target CPA to $20.
After enabling target CPA, we would hope to see an increase in spend and conversions. This is because the Pet shelter is now able to bid above the $2 CPC cap, with the highest bids being placed on users that Google’s machine learning believes are more likely to schedule an appointment, based on the pet shelter’s historical account data.
To evaluate whether target CPA is working well for this campaign, the pet shelter should look at changes in the number of conversions and don’t get distracted by changes in clicks, because ultimately what matters most is whether those clicks lead to an appointment being scheduled.
It’s also important to be patient – it may take a few days for a user to schedule an appointment after clicking on an ad, and Google’s machine learning requires some time to learn. Even if the pet shelter only sees 8 appointments scheduled in the week after Target CPA was turned on, for example, they should wait until they have a full month’s worth of data and compare that month’s appointment number to the baseline of 40, in order to evaluate whether this bidding strategy is a good fit.
When it comes to the target CPA value, it is usually necessary to test a few values until you find the right one. If you notice that conversions went down after implementing target CPA, it may be because a campaign’s target CPA value is a bit too low. In this case, you can try raising the target CPA value by a few dollars.
On the other hand, if you’re consistently spending your account’s full budget, there may be an opportunity to decrease your target CPA value by a dollar or two, to find the sweet spot where you are still spending your full budget but are getting more conversions at a lower average cost per conversion.
Ideas to reduce and optimize Target CPA
- How to Reduce and Optimize Google Ads CPA?
- Amp up your Quality Score
- Tighten up your account campaign’s structure.
- Turn Off Partner Network Targeting
- Optimize landing pages and Ads including key elements forms, Buttons, Copy, Images, and Content.
- Check up on your “limited by budget” campaigns.
- Fine-tune your bids for Device, Demographic, Audience, Networks, and Time of the day.
- Adjust your bids for manual/enhanced CPC campaigns.
- Adjust Demographics Targeting
- Optimize Device Bid Adjustments
- Stop Low Performing Campaigns
- Adjust Ad Schedules
- Adjusting Location Targeting
- Replace Broad Match Keywords
- Pause Low Performing Keywords
- Add Negative Keywords
- Reduce Keyword Bids
How to edit your campaign bid strategy
- Sign into your Google Ads account and click on the campaigns tab
- In the list of campaigns, find and select the campaign you would like to change the bid strategy
- Click Settings in the page menu for this campaign.
- Open Bidding and then click Change bid strategy.
- Select your new bid strategy from the drop-down menu, in the above case, it will be Target CPA.
- Click Save.
FAQ
Target CPA is a smart bidding that sets bids for you to get as many conversions as possible at the desired cost per conversion.
CPA stands for Cost per Acquisition or Action.
– Use when you want to get the most conversions for a target CPA.
– Do not use it when you want control over bids and ad scheduling.
– Target CPA can be applied at Campaign and Ad-group levels.
($) total spent to acquire new customers via a specific channel or campaign / (#) new customers acquired via the same channel or campaign = ($) Cost Per Acquisition.
It totally depends on your campaign goals. In my opinion, the CPA bidding strategy is the better option. CPA uses Machine learning, AI and Historical data to determine when to show ads and how to increase campaign ROI.
You can not directly start with the CPA bidding strategy as it requires historical data. All campaigns start with CPC and once over 30-50 conversions are received, within a month, then you can migrate to CPA.
- If you have a limited budget or are new to Google Ads, CPC might be the optimal choice.
- CPC can help you learn about keywords that bring sales or conversions and keywords that need to avoid.
- One of the advantages CPC provides, it gives total control to advertisers over the amount want to pay for an ad click.
Target CPA requires analysis of historical data, you need at least 15 conversions in the past 30 days in order for this strategy to run.
Target CPA uses advanced machine learning and historical data to automatically optimize bids and offers auction-time bidding capabilities that tailor bids for each and every auction.
For search campaigns, Start with a budget of at least 3 times your target CPA.
For video, campaigns start with a budget of at least 4 times your target CPA.
Display campaigns start with 4-6 times your target CPA.
CPA = Total budget spent / Number of conversions
A good CPA allows the campaign to perform while enabling real-world ROI. A good cost-per-acquisition ratio is 3:1. Three times the historical avg CPA cost. CPAs should be high enough that Ad platforms/Networks can still bid enough to maintain around 65% top-of-page impression share. Yet it should also be low enough that gross margins are maintained.