Hear
NEW! Listen to the article
Log in or register to access this feature!
Marketers rave about the potential of Google’s Target CPA bidding, which combines machine learning and AI to deliver cutting-edge insights and results. It accumulates as many conversions as possible towards a specific cost-per-acquisition goal, so it quickly gains popularity in marketing.
There are two main reasons for this:
- First, target CPA uses real-time signals like browsing history and location to serve ads. Rumor has it that the technology even takes into account weather trends, the stock market and IoT devices.
- Second, it bids at the auction level faster than humanly possible. Campaign managers can’t bid on every impression every second of the day, but artificial intelligence makes it possible.
Google is leading the way by allowing a wide variety of campaigns to use the target CPA bid strategy and the brands are eating it up. After all, advertisers are always trying to find ways to optimize campaigns and achieve one of their most important goals: to make a profit.
But first, marketers need to make sure that the target CPA is strategically fitting.
Limited scalability? A common misconception
Many marketers believe that scalability – i.e. spend and efficiency – is limited when using a Target CPA strategy. That’s true to a certain extent, but it’s not the whole story.
Google will only allow your ads to appear in auctions that you believe are possible within a set CPA threshold. This means that other auctions that you don’t necessarily participate in will be removed, limiting your relative spending. Adjusting the CPA setting to a higher or lower value, however, offers fluctuations in spend and gives advertisers a little more control.
In such a case, there are two levers you can use: increasing or decreasing your CPA goals and increasing or decreasing your budget thresholds. The former allows you to scale your spending, and the latter determines whether you participate in auctions based on how much you can spend in a day.
Think of it this way: if your daily budget is too low, you will be banned from auctions all day and will likely not be available to you for all of the options that you would otherwise be entitled to. However, if your CPA setting is too low, you will likely not be able to participate in auctions and therefore will not be able to spend the allotted budget.
Your campaign performance will therefore be efficient and effective if you make optimal settings.
This is how you decide if the target CPA is right for you
A target CPA can produce great results for your brand, but it’s not for everyone. It comes with a steep learning curve and, due to its ever-changing nature, can cause stress and anxiety for marketing teams. For example, you may experience fluctuations in performance of 10-40% in a single day – a roller coaster ride not for the faint of heart.
The Target CPA is best used by brands with a clear goal in mind: performance-driven brands that are often trying to optimize lead generation or ecommerce sales. Those with trackable KPIs do exceptionally well; those who rely on offline KPIs may find it difficult to implement a target CPA strategy unless those KPIs are manually (and frequently) entered into the system.
Since there is so much to consider, ask yourself the following five questions before accepting the target CPA.
1. Do I want to spend less time manually adjusting bids and focus more on strategy and planning?
If the answer is yes, Target CPA is for you. You can stop manually pulling levers within your campaigns. You no longer have to set keyword bids, segments of the day, devices or target groups yourself. This gives you more time to develop strategies for your customers and your company as a whole.
2. Do I have a static lead or sales CPA target as my main KPI?
If the answer is yes, Target CPA is for you. Having a static Sales CPA or Lead CPA goal is important because you need to set the system with a specific goal: a single number to track. The target CPA is great for these strategies.
If your goal is dynamic and constantly changing, goal CPA strategies are not the best for your needs because of the learning curve involved.
3. Am I currently tracking leads or sales in my Google Ads account?
If the answer is yes, the target CPA might be right for you. Tracking leads or sales in your account is key as you are working to grow them for your business. You cannot optimize a bid strategy for leads or sales if the system does not track those leads or sales.
4. Do my campaign flights usually last three months or more?
If the answer is yes, the target CPA might be right for you. Due to the tool’s learning curve, it typically takes several weeks or months to achieve optimal results.
If you need quick wins, avoid the Target CPA bid strategy. Making minor adjustments to optimize a campaign usually takes 1-3 months, depending on the volume. Typically, you will need an even longer runway for Target CPA to take full advantage of the technology.
5. Do I frequently change my keywords, targeting, and ads during a campaign?
If the answer is yes, the target CPA may not be the best option for you. Consider manually managing your campaigns instead.
One of Google’s toughest recommendations to campaign managers using Target CPA is to lend a hand while AI and machine learning technology do the work for them. For practical campaign managers who want to be involved in every campaign detail, this can be difficult to overcome.
* * *
Many companies are using target CPAs and are benefiting from them. But as with any digital marketing tool, you can’t expect the benefits until you decide whether it is strategically suited to your needs.
If it fits, the target CPA could make all the difference in helping you stand out in a crowded media landscape.
More resources on Google Ads and Target CPA
Five Google Ads Tips to Help You Become a Better PPC Marketer
Go beyond Google to get new customers with search advertising
SEO vs. Google Ads: Which Approach is More Effective?
