Getting Started with CPA (Cost Per Acquisition) Bidding
The opportunity to allow the CPA bidding system to attempt to automatically improve your ROI based on historical feedback is a valuable one. I have had a number of clients in various different industries see a success from it to the extent of reducing their average cost per conversion significantly. Not only will you save money by using CPA bidding but also a great deal of time.
What is CPA (Cost Per Acquisition) Bidding?
CPA (Cost Per Acquisition) bidding is an intelligent and automated bidding system designed to help you achieve conversions (sales, leads, signups, etc) at a cost of your choice. You are not necessarily guaranteed a conversion at the CPA bid you set but the system attempts to acquire a conversion before this cost is reached by using historical feedback within the campaign and other external parameters.This form of bidding automatically optimises your placements in each ad auction with the intention of avoiding unprofitable clicks while obtaining as many profitable clicks as possible.
Why use CPA Bidding?
Anyone interested in achieving a ROI (return on investment) while using AdWords should at least look into testing CPA bidding once at some point. The opportunity to use an automated system which can consider a multitude of calculations every time a search relevant to your business is made, is a valuable one, especially when the system has the ability to make the best decision for your business. These calculations are based upon a variety of factors such as an ad’s conversion history, the keyword’s broad match query, the user’s location and the conversion rates of Google’s Search Network and partner sites on the Display Network. These factors can be taken into consideration manually to a certain extent but could never be performed as fast and often as the CPA bidding is able to. The manual approach would also mean downloading stat reports, analyzing keyword and ad performance, reviewing locations and time activity, etc; all this takes a considerable amount of time which is valuable within any business. The CPA bidding option addresses this issue and allows you to have a more automated approach to management.
When this feature was first released I decided to test it out on one of my client’s campaigns. The results were fairly instantaneous and resulted in a reduction in cost per conversion with an increased total number of conversions. Even now I will occasionally test CPA bidding with different client accounts to compare the performance against running the campaigns manually, generally the CPA bidding will match the performance at the very least but it is not unusual for it to perform even better.
When to use CPA Bidding?
It is important to know that CPA bidding is only available for campaigns which have received at least 15 conversions within the last 30 days. I suggest that these conversions are acquired naturally though as otherwise the automated system will function based on false information which in turn can be damaging to the performance of your campaign. I also wouldn’t necessarily be too eager to activate CPA bidding as soon as you have gained that 15th conversion as the system works mainly using historical data so the more you have then the more accurate it will be when attempting to improve the performance of your account. Upon activating CPA bidding within a campaign, you will be prompted to set a Max CPA or Target CPA bid depending on your preference; the Max CPA bid gives you the opportunity to alert Google to the most you would ever want to pay for a conversion while Target CPA shows how much you would like to pay per conversion on average. Google will most likely suggest a higher than expected bid when selecting the Max CPA option but in reality the system is still trying to acquire conversions at a lower price than this, it simply allows a margin or window of flexibility to work with.
If you don’t feel like you have enough time to manage your AdWords account on an hourly or daily basis then I would suggest trying out CPA bidding if you have enough historical feedback in terms of conversions. Sometimes it is worthwhile to try the system out anyway though. I personally try to use all new AdWords features with an account to see what sort of impact they can have on a campaign and CPA bidding is no exception to this philosophy. Just ensure that you keep a record of previous performance before running CPA bidding so as to allow comparisons to be made between the two after a period of time. I cannot manage the campaigns for my clients 24 hours a day as I am only human but at the end of a day I will activate CPA bidding for some clients, to take over where I left off. This is especially useful for businesses who need their ads to run a full 24 hour cycle across different time zones as the account can run on “autopilot” so to speak. It is also useful to note that CPA bids can be set at ad group level meaning that you do not have to rely on one target price across everything advertised on your website. This would not be feasible for an e-commerce business which has a multitude of varied products for example. The CPA bidding setting is no perfect or guaranteed way of getting conversions but is still definitely something I would suggest all AdWords advertisers to try out. I, among many, have seen the benefits of using it and I hope you do also.
Tips on using CPA Bidding
- Consider how recommended CPA bids are calculated - These are based directly on your current CPC bids and conversion rates over time.
- Don’t rely solely on CPA bidding - Your account will still need to be managed from time to time with regards to reviewing ads, keywords, placements, etc.
- Use CPA bidding efficiently - Remember to make use of CPA bidding especially during the periods of time that you are unable to manage the campaign(s) yourself.
I have been managing AdWords accounts for over 8 years now at an international marketing agency level and also as a freelancer. I am very passionate about Google's PPC platform and pretty much anything else that is Google related. My theory in life is to learn something new every day and this community is definitely a good place to do so; I would recommend anyone reading this to stick around as it's an excellent source of information with great people contributing to it.
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