Machine learning is changing how we interact with the world around us, and paid search is no exception. Gone are the days of search marketers manually changing bids all day long as the number of contextual signals to consider becomes increasingly expansive. It’s time to let the algorithms do their thing.
Several smart bidding strategies empower digital marketers to get the most out of performance marketing. Take the recently unveiled Performance Max campaigns as another example.
Which is right for any particular account or campaign will depend on your aims, budgets, campaign types, and, in some cases, conversion history.
If you’re unsure which one would align with your goals, your first port of call should be in the recommendations section in the Google Ads interface. This is where Google will recommend appropriate bidding strategies for your campaigns based on how they’re set up.
What Is Target CPA Bidding Strategy?
In this case, we’ll look at a bidding strategy called Target CPA (tCPA), which means target Cost-Per-Acquisition. But what is target CPA?
Target CPA is an algorithmic bidding strategy in Google Ads that uses machine learning to capture as many conversions as possible for a set cost-per-acquisition (CPA). This Smart Bidding strategy automatically optimises bids to deliver the best results at every auction. It is available to Google Ads users across single and multiple campaigns.
How Does Target CPA Work?
Target CPA works automatically, using historical data and contextual signals - for instance, device and location - to find the best possible bid for your ad every time it's eligible to appear. You may find that some conversions are more expensive than the value you set and some cheaper, but Google will always optimise to hit the defined target CPA.
It's worth remembering that many factors that contribute to the CPA you see aren't within Google's control. Changes to your ad creative or website layout could increase or decrease conversion rate, making it difficult for Google to predict exactly what will happen for individual bids.
Target CPA vs. Maximize Conversions
The key difference between Target CPA and Maximize Conversions bidding strategies is that the latter will try to deliver as many conversions as possible for the budget you set. This means that when using the Maximize Conversions strategy, Google will often try to bid lower in auctions to stretch your budget.
On the other hand, Target CPA may bid higher to succeed in auctions where the expected CPC may be higher. The bidding strategy you choose will depend on your business and whether or not you have a fixed target.
Should I Use Target CPA?
If you’re a direct-response advertiser focused on driving conversions at a certain CPA, this is, broadly speaking, the smart strategy for you. You’ll want the freedom to set your CPA, but your approach should be fluid and data-driven.
By data-driven, we mean that smart bidding strategies work best by utilising as much data as possible to set optimal bids in each auction. With that in mind, it’s advisable not to set up an initial 50/50 experiment to test the efficacy of tCPA.
To the automation sceptics out there, this might seem like madness - what if the automation runs away with itself?! However, our experience is one of success in all instances where tCPA was implemented across the highest-volume campaigns in an account without prior testing.
Google advocates this approach, emphasizing that letting the algorithm access as much data as possible will set it up for optimum output. Conversely, if you only let it run on 50% of the traffic in a campaign, the results you see may not truly represent performance.
How To Set Target CPA
We all have a dream CPA target, but that’s not what tCPA bidding is for. When you come to set it up, Google will recommend a CPA for it to optimise towards. This figure is based on actual conversion data rather than your ideal figure (unfortunately).
You can set your own target at this stage, but if it’s significantly different from that which the campaign has historically achieved, you risk limiting the remit of the algorithm. This will essentially have the same effect as not letting it have access to as much data as possible.
Target CPA can be implemented on a single campaign (handy if you have different CPAs for different campaigns or ad groups, as it can be set at either level) or as part of a portfolio bidding strategy.
However you decide to implement tCPA, the algorithm will set bids automatically to optimise based on contextual signals (the extent of which is, realistically, beyond human capability). Don’t be alarmed if your CPC initially seems inflated - after all, the ultimate goal is to get as many conversions at the CPA you’ve set.
While you can set a bid limit as part of a target CPA strategy, this is not recommended, as doing so can restrict how much the algorithm can optimise for you.
What is a Good Target CPA?
A good target CPA is a difficult thing to define. Much like conversion rate, cost-per-acquisition is incredibly individual and strongly influenced by industry, context, and website performance. For that reason, our recommendation is always to give Google as much data as possible, so it can take all of that information - much of it beyond what a human can reasonably do - and deliver the best results possible.
Target CPA Best Practice
Once you’ve got tCPA up and running, the next step is to leave it be. Best practice dictates that you don’t make any major changes for at least two weeks to allow for full optimisation. You need to give Google's Smart Bidding algorithms a chance to do their thing.
Major changes would be amendments to the campaign budget, significant campaign structural changes, and any changes to the target CPA itself (don’t make it a moving target!). While you may see fluctuations in performance initially, these are normal. If everything has been set up correctly, you should see improvements surprisingly quickly.
Once this two-week ‘learning’ phase has elapsed, you can opt to set new CPAs where you see positive performance, i.e., where the algorithm has managed to decrease the previous average CPA of the ad group or campaign. Remember to always reflect on a campaign or ad group’s average CPA over a 30-day window to inform any changes you make.
Finally, unlike other smart bidding strategies, any campaigns running on tCPA can still have device-level bid adjustments added or changed. Remember that these will not work similarly to manual or eCPC bid adjustments.
For example, bidding up by 20% on mobile devices for a campaign using tCPA will increase the target CPA that the campaign is optimising towards by 20%, not the bid. This is because the bid will be in a fairly constant state of fluctuation due to the nature of tCPA.
Target CPA Results
Following Google’s recommendations, implementing Target CPA has produced excellent results across several verticals, proving its versatility. Typical performance improvements include increases in conversion rate and ROAS, decreases in CPA, and increases in traffic quality (the algorithm optimises bids for the most engaged searches).
A Final Word On Smart Bidding
While there may still be scepticism surrounding smart bidding, the results speak for themselves. As search marketers our roles are part of a constantly changing landscape; embracing those changes means embracing automation.
Smart bidding strategies, like Target CPA, enable us to move away from manual tasks and focus on getting stuck into digital strategy, data trends, and attribution.
The likes of Google and Bing heavily advocate ‘data-driven digital marketing transformation’ to enable digital marketers to ‘use statistical models and machine learning tailored to each campaign’ (Think With Google, March 2019).
It’s not about letting the machines take over but rather about letting them do what they do best, both as account managers and individual advertisers.
