Nowadays, businesses running Google Ads no longer focus on ranking at the top but instead prioritize how to gain the most customers and revenue. Google measures this through the number of conversions and the cost per conversion. If manual CPC bidding strategies have limitations and don’t deliver the desired conversions, then the Target CPA (Cost Per Acquisition) bidding strategy is the perfect choice to help businesses maximize revenue and save costs effectively. In this article, let Optimal Agency take you through this bidding strategy in detail!
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What is Target CPA?
Target CPA refers to the target cost per action or the target cost per customer acquisition. It is a smart bidding strategy available in Google Ads. With this bidding strategy, you will get as many conversions as possible at or below your set target cost per action (CPA). The Target CPA strategy uses advanced machine learning technology to automatically optimize bids. The feature of bidding at auction time adjusts bids for each individual auction.
Some conversions may be more or less expensive than your target CPA, but Google’s algorithm aims to keep the cost per conversion as close as possible to the target CPA you’ve set. To implement the Target CPA bidding strategy, you need to enable conversion tracking. Additionally, you should carefully check your budget before setting a Target CPA bid.
Using Target CPA helps you use your budget more efficiently by only paying for conversions. Moreover, it saves time and effort in managing the campaign. By using the Target CPA bidding strategy, you can improve your conversion rate, as bids are adjusted in real-time, ensuring the business gets the most conversions with high efficiency.
You can set Target CPA bids for both search campaigns and display campaigns on Google. Additionally, you can use Target CPA as either a standard or portfolio bidding strategy to optimize bids across multiple campaigns. Along with setting up conversion tracking, you should ensure that your campaign has at least 15 conversions in the past 30 days to use Target CPA. Google recommends having a minimum of 30 conversions in the last 30 days for Target CPA to be effective for your campaign.
Readers should refer to other related information such as Google Ads automated bidding strategy.
How does target CPA work?
Based on past conversion data and real-time signals, Google Ads identifies users who are more likely to convert. During the auction, Google Ads processes campaign information and makes an assessment. It then automatically determines the most suitable bid for the ad each time it’s eligible to appear to the target audience.
Google Ads sets these bids to achieve an average CPA equal to the target across all campaigns using this strategy. However, there will always be some variation in the cost per conversion, as actual conversion numbers will differ from predicted conversions. Still, Google Ads will try to adjust the cost per conversion to align with the target CPA as closely as possible.
How to set up the Target CPA bidding strategy?
To use Target CPA effectively, a strategic approach is required in planning and execution. First, you need to understand the campaign’s goals and the value of each conversion. Next, align these goals with your overall marketing strategy. Also, consider factors such as customer lifetime value (CLV) and profit margins. When integrating Target CPA into your strategy, focus not only on optimizing conversions but also on ensuring that conversions contribute to profit. Additionally, you may consider segmenting audiences and adjusting bids based on specific criteria.
Setting Target CPA
Target CPA is the average amount you want to pay for a conversion. This metric can affect the number of conversions you get. Google Ads helps users find the most appropriate target CPA, especially if you’ve had past conversion data. However, you shouldn’t rely entirely on Google but calculate a suitable target CPA yourself. If the target CPA is too low, you might miss out on clicks that lead to conversions, reducing the overall number of conversions and impacting the campaign’s effectiveness.
Determining average Target CPA
The average Target CPA is the weighted average of the costs that the bidding strategy is optimized for. It includes the average number of bid adjustments for devices, ad group Target CPA, and any changes you’ve made to the Target CPA over time. Thus, the average Target CPA may differ from the set Target CPA. This metric allows you to calculate the CPA that the bidding strategy is aiming for over specific time periods.
By adjusting the date range, you can see which strategy was optimized for that period. You can view the average Target CPA in the bid strategy report next to the actual CPA, showing the actual CPA the strategy was able to achieve. It is used for both standard and portfolio bid strategies.
Bid limits
You should avoid setting bid limits for the Target CPA strategy as it will restrict Google Ads’ ability to automatically optimize your bids. Additionally, bid limits prevent Google Ads from adjusting bids to meet the best ROAS (Return on Ad Spend) target. Bid limits only apply to Target CPA strategies in portfolio campaigns. These limits include maximum and minimum bid limits.
Device bid adjustments
Device bid adjustments for Target CPA allow you to prioritize conversions by device. You can set adjustments for desktops, tablets, and mobile devices. Unlike manual CPC bidding, adjusting device bids for Target CPA modifies the value rather than the actual bid. For best results, remove manual CPC bid adjustments when switching to Target CPA.
Pay for conversions
Instead of paying per click for display campaigns using Target CPA bidding, you can choose to pay for conversions. When setting up a campaign, go to the Bidding section, find the label “Pay for,” and select “Conversions” from the drop-down menu.
Allocating conversions for Video Ads
For video ads using Target CPA, Google Ads uses conversion data from your campaigns to predict the likelihood of an interaction with your video ad leading to a conversion. Interactions with TrueView for action video ads are defined as clicks on the ad or views lasting 10 seconds or longer, with only clicks being charged.
By using the Target CPA bidding strategy, businesses can effectively allocate their budget to maximize conversions, save time and costs, and improve conversion rates, leading to higher sales and profits.
Please see more:
- How to target details in Facebook ads
- Top 4 effective ways to target demographics on Facebook
- How to run Performance Max Google Ads correctly
FAQ
The set Target CPA is what you aim for to let Google know your goal. Google’s machine learning system optimizes to align as closely as possible with this target, though in practice, there may be slight or significant variations, especially if not used correctly.
Target CPA is ideal for campaigns with clear conversion goals, such as sales or sign-ups. However, it is less effective for campaigns focused on brand awareness or those with very low conversion rates.
