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Changing target CPA bid

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hello
I haven't been able to find much on this subject. It must be noted I am aware avg CPA over time approaches the defined taget CPA bid - and before this happens the CPA can be more or less than the target CPA bid based on the accuracy of Googles prediction.

Say I have this webshop selling mugs with printed text. One specific mug has 2 variants: "Best Mom" and "Best Dad". I predict 10$ is the correct target CPA so I still will be able to have a positive ROI (or ROAS).

If the "Best Dad" goes out of stock 10$ would be too expensive for 2 reasons: 
1. A customer may only be interested in the sold out version and bounces.
2. A customer may intend to buy both mugs but buy only the one I have for sale.
For these reasons I want a 5$ target CPA bid until i get more mugs from the vendor.

How does this target CPA feature react to quick changes? Will a short temporarily change have any affect at all? 

I'm hoping for this feature to be time independant so it wouldn't look at the CPA history on 10$ and compare this to the new short term $5 target CPA - That could be a problem.

I hope I have made myself clear - Thanks in advance.

3 Expert replyverified_user

Re: Changing target CPA bid

Google Employee
# 2
Google Employee

Hi LTaps,

 

This is a great question. Our community team would like to do some additional research this. I want to make sure we give you the best answer. Let us research it a little and then we will post a response for you and the entire community.  

Re: Changing target CPA bid

Google Employee
# 3
Google Employee

Hi LTaps,

 

That’s a great question - I would be happy to provide further information about the way a target cost-per-acquisition (CPA) bid could react to a quick change and what effect(s) the change could have.

 

The system should adjust relatively quickly (within 24 to 48 hours) to any change in CPA. This being said, there would likely be adverse effects as a result of such a sudden and drastic change.

 

In the system’s effort to hit the reduced CPA (in your example, $5.00), your CPC could drop dramatically, and become much less competitive. Because halving your CPA by 50% is such a drastic change in the bidding method, it would likely lead to a decrease in traffic and therefore overall conversions.

 

We would not recommend significantly changing the CPA in such a short period of time.

 

In summary, the scenario you described is possible, and the system would adjust to the changes within one to two days, but these changes would have unintended effects on your ad traffic. Because of this, I recommend leaving the target CPA alone, if possible.

 

Please let us know if you have any further questions Smiley Happy

 

Best,

Amy

 

Re: Changing target CPA bid

Visitor ✭ ✭ ✭
# 4
Visitor ✭ ✭ ✭
Hello Amy,

Thank you a lot for having the time to answer! :-)

Its great with the relatively quick adjustment! But now I'm wondering what to do when I have an item partly or fully out of stock? Or something similar that temporarily would make the value and/or likelihood of conversions change eg. special discount on item.
The alternative of changing the CPA target in the mug shop example is to pause the ad for a period of time - But that sound to me like a too big loss of traffic and potential.

What is your recommendation for these temporary periods where there still is conversion potential but the normal target CPA bid is too expensive? Of course I would expect a significant drop in traffic but that's still better than no traffic at all right?

Re: Changing target CPA bid

Top Contributor
# 5
Top Contributor
Hi LTaps,

In addition to great suggestion by Amy's:

what I do when I use conversion optimizer bidding method, I change target CPA/Max CPA according to Last 7 days and Last 30 days stats. What google predict and recommend to keep CPA is based on overall campaign performance, it is not based on individual adgroup performance, As you have noticed each adgroup has their onw stats and accordingly we should made changes to bid. As Amy;s already mentioned if you will bring it way too down it can reduce traffic and then conversions.

I always make changes to adgroup bid considering previous stats when changing CPA bidding to CPA bidding.

Hope that helps!

Thanks
Neha Gupta
Neha Gupta, AdWordsTop Contributor Follow Me: My Blog | Twitter | Google+ | LinkedIn
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Re: Changing target CPA bid

Visitor ✭ ✭ ✭
# 6
Visitor ✭ ✭ ✭
Hi NehaGupta
Thanks for answering.
I was actually only focused on specific ad group CPA target bids so were on the same track Smiley Happy
But there is two cases to consider when determining the CPA bid:
One is the historical conversion value performance as you say over eg. 7 or 30 days taken from Adwords panel.
The other is the current state of your product or page. There are times where you can predict the ROI won't continue to be as it has been the last week (things that is not possible for Google to include in their prediction) - For example when a variant of an item is out of stock or you have a temporary discount on that item. Therefore you have to adjust the CPA bid accordingly and change it back when things are back to normal.
Of course I will have less traffic when I lower the CPA bid. This is because my own "item info based prediction" concludes its more unlikely visitors will buy - But if I can get those few clicks where Google predict a very high chance of conversion then that's better than pausing the ad group.
As Amy would not recommend changing CPA bid in a shorter period I'm looking for the alternative on my problem.
I am really talking about having 2 prediction models: One model to determine how much you are willing to pay for a conversion (CPA bid). This one you must do yourself. The other model is to determine how much you are willing to pay per ad click and is a model best managed by the Adwords conversion optimizer feature.
If for a shorter period I am willing to pay more or less for a conversion on my item (ad group) what do I do if I'm not supposed to change CPA bid? Should I keep it as it is and lose money on a potential negative ROI or should I pause the ad group and lose traffic? I would rather not choose any of them!
I know we are close to a more theoretical problem but I think having this sorted out would help me a lot. I hope someone understands my question.. :-)