Target CPA bidding is one of many bidding options that Google offer advertisers. It is actually one of 9 individual bidding strategies you can us in your advertising campaigns. These include:
- Manual CPC
- Enhanced CPC
- Target CPA
- Target ROAS (Return on ad spend)
- Maximise clicks
- Maximise conversions
- Target search page location
- Target outrank share
- Viewable CPM (This only applies to campaigns on the display network)
The majority of these bidding strategies are quite new. Previously there were only a few options for search campaigns. These were manual cpc, enhanced cpc, maximise clicks and conversion optimizer (the old name for CPA bidding).
This can be quite confusing for new advertisers as it is hard to decide which bidding strategy is best for their business.
What is Target CPA and How Does it Work?
The main objective of target CPA bidding, is for Google to generate conversions at a fixed price you set. CPA stands for cost per acquisition. This essentially means the cost you would like to pay for a conversions. This could be a lead, phone call, a sale, or any other onsite action that you are tracking.
Target CPA Bidding works by letting Google automate your bidding. By doing this you (as an advertiser) can no longer control individual keyword bids manually. When using this bid strategy, Google uses your existing account data and machine learning to aim for your target CPA.
This does sound great. Who wouldn’t want to just set a target and let Google do all the work? In reality it doesn’t always work this way.
In our experience here at CPS Media this is not always the case and we have seen mixed results with target CPA bidding when managing clients Google ads account.
When Should You Use Target CPA Bidding?
Target CPA bidding can be useful in a variety of circumstances. We find it tends to work better on higher volume account with more spend and conversion data.
Google uses their own algorithm to adjust bids at the auction level. This means that every time a search is performed on Google, or an impression is served on the display network, Google will use their own data and machine learning to set the bid.
Google will also look at the recent and historical conversion data in your account.
For low volume campaign that don’t produce many conversion, it is less likely, that this bidding strategy will be as effective. However this doesn’t mean it isn’t worth testing.
For high volume campaigns with lots of conversions target CPA will usually work much better. However, target CPA bidding is not guaranteed. The results can vary, even on higher volume accounts.
How to Set Up Target CPA Bidding
To set up target CPA bidding in a campaign you will need to go to settings. Next click the bidding drop down and click change bid strategy. Depending how your bids are currently set you may need to click another link that says “select a bid strategy directly”.
Next you will need to choose from the list of automated bidding strategies. In this case we are obviously choosing target CPA.
Once you select the target CPA bidding strategy, you can choose a target CPA. At this point Google will give you a recommended CPA. Here you have a number of choices:
- Go with the recommended CPA
- Increase the CPA
- Reduce the CPA
In our experience we have found the first two options to be the quickest to produce results.
For the third option where our goal is to reduce the CPA, this can have some problems. The main issue is that lowering the bid to much, to quickly can severely throttle your campaign. What this means is your spend will drop and you will start receiving less clicks and conversions. The reason this happens is Google is lowering bids to try and achieve the desired CPA.
If your main goal is to lower CPA, a good way to try achieve this is slowly lowering your bid over time
Incremental CPA reduction example
Let’s assume we are running a campaign where we are generating leads at £60. We are spending £3000 per month so we are generating 50 conversions on average.
The goal for the campaign is to achieve a CPA of £40. So we decide to implement a target CPA bidding strategy.
What you will find is Google will give a recommended bid. This could be slightly lower, or slightly higher than you’re existing cost per conversion. It is highly unlikely that the recommended CPA is going to be anywhere near the £40 we are aiming for. In this scenario we would recommend lowering the bid slightly (5-10%).
If we chose to lower the CPA by 10% that would mean our new Target CPA would be £54. Once this has been selected you should wait for at least 20 conversions and analyse the results.
The main things to look for are, whether your traffic remained consistent and did Google manage to reach your CPA. If things are looking good and you are still getting the same amount of traffic and CPA is coming down repeat the process.
The goal of this process is to lower in small increments. This allows Googles machine learning time to adjust. Plus it gives you the ability to monitor traffic and conversion volume.
By lowering incrementally, you are able to see any points where traffic drops off.
Target CPA Bidding Conclusion
Overall this can be a great strategy, however it won’t work in every campaign, and the best thing to do is test. This is the only way you can be sure if this type of bidding will work for you.
Have you used Target CPA bidding successfully? Let us know in the comments below. Also if you have any questions we would be happy to help.
In the meantime keep an eye out for new guides on other bidding strategies that will be coming out shortly.