Breaking Down AdWords Target CPA Bidding

Hans Tveten
By Hans Tveten

Over the past 2 years, the AdWords platform has seen several enhancements that stem from Google’s increased adoption of machine learning. One of these, Target CPA bidding, aims to automatically optimize your bids to generate conversions within your CPA target. Using target CPA bidding you’re letting Google take the reins of bidding in individual ad auctions. If Google’s algorithm thinks the search query is more likely to lead to a conversion, you’re more likely to have a higher position. There are mixed feelings about using Target CPA bidding so let’s review the basics and why you would want to deploy in your campaigns.

The Basics

Using historical information about your campaign and evaluating the contextual signals present at auction-time, Target CPA bidding automatically finds an optimal CPC bid for your ad each time it’s eligible to appear. AdWords sets these bids to achieve an average CPA equal to your target across all ad groups and campaigns using this strategy.

One important thing to keep in mind is that you can’t just start using Target CPA bidding right out of the gate with your AdWords account.

Conversion tracking needs to be enabled with a minimum of 15 conversions in the last 30 days. As with most things, the more conversion data you have, the better Google can manage your CPA goal.

Why And When To Use Target CPA?

The thought of handing over control of your bids to Google can be a very scary thought. Automated bid strategies are better suited for situations when you are bidding on a large volume of keywords with larger budgets and numerous campaigns. If you are a smaller advertiser or even new advertiser to AdWords, then its best to focus on manual bidding. Another important thing to keep in mind is that you should deploy Target CPA from the Shared Library section of the account. Although you can apply it to campaigns individually, it’s harder to track the status and performance of the bid strategy that way, which makes scaling difficult. From the shared library, you can see how well the flexible bidding strategy is working holistically.

If you are worried about overspending, you have the option to adjust your bid limits. If you’re on a limited budget and want to monitor your bids closely, you can set a max and minimum bid limit so that Target CPA Bidding doesn’t overspend on an unnecessary bid. 

 

PPC Forecasting Tool

 

How To Setup Target CPA

Getting setup with Target CPA is a very easy process:

  1. Log into your AdWords account
  2. Click on Shared Library tab
  3. Click on Bid strategies within the Shared Library menu
  4. Click on the red “+Bid Strategy” button and select Target CPA
  5. On the next screen, you can choose a name for the strategy as well as which campaigns you want to apply it to.
  6. Enter your Target CPA. Again, this is the average amount you’d like to pay for a conversion.
  7. You can also set minimum and maximum bids from the Advanced Options drop down.
  8. You can also implement Target CPA on individual campaigns from their respective Setting tab:

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Reviewing Your Results

You can take a look at results after you implement Target CPA both at the campaign and Shared Library level. I recommend looking at it from an account perspective in the Shared Library. Usually, you’ll want to review results after about 30 days before you start drawing any conclusions. Additionally, once you’ve run your campaigns, you can review your performance using Google’s Target CPA Simulator tool, which tells you how you could have performed if you had set different CPA targets.

Wrapping Up

A recent case study from AdShark Marketing showed a significant increase in conversions and lower costs for a B2C ecommerce brand after implementing Target CPA. Performance will be dependent on may factors such as product, profit margin and demand. Overall, I would deploy this strategy on campaigns with high conversion volumes and firm CPA/CPL targets.

At the end of the day, there are things that an algorithm can optimize for that humans can’t. No matter how good on an SEM marketer you might be, you cannot look at search query data in real-time and make adjustments across numerous elements. At the core, Target CPA provides advertisers with a scalable way to get more aggressive with bidding in hopes to gaining additional customers. Looking at the last 2 years, I think it’s safe to say that we can expect more machine learning enhancements to AdWords.

If you have had any experience or thoughts on using Target CPA, please feel free to comment below.

 

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Hans Tveten is a Paid Media Account Manager at Power Digital Marketing. He has 10+ years experience in digital marketing, working with leading B2B and B2C brands on multiple lead gen, branding and acquisition projects. Hans graduated from Webster University in St. Louis, MO with a degree in International Business and Marketing