How using target CPA affects an AdWords campaign

By Ryan Mitchell | Director
10 May 2018

How does target CPA smart bidding affect an AdWords campaign?

Cost per acquisition (CPA) is a metric used by advertisers to work out how much they pay per conversion. It's a great PPC metric to use when you want to ensure you're campaign is not operating at a financial loss.

AdWords has many bells and whistles, some useless, some game-changing. Target CPA allows you to set how much you want to pay for each conversion.

Yes, that's right - CPA bidding allows you to set the amount you want to pay for every conversion from a campaign. AdWords will automatically adjust your bids to try to get more conversions at or below your set cost per acquisition. 

The overall reason for target CPA bidding is to give advisers an easy way to ensure their campaign is driving conversions without wasting budget on useless keywords and phrases. 

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We wish it was as simple as set CPA and forget.

But that would be way too easy - no campaign should ever be left unmonitored. We've seen target CPA reduce the CPA by 35% (good), and we've also seen it increase the CPA by 20% (baaaad).

By rule of thumb, make sure that there is at least 30 conversion in the past 30 days to ensure CPA bidding does not tank your campaign's performance.

I also wouldn't recommend applying target CPA to your whole campaign. It is best practice to set up a campaign experiment so you still have a control version of your campaign running.

How does target CPA work?

Magic.. 

No seriously though, something pretty close to it. Google has 3.5 billion searches per day. It knows trends in people's search behaviour and has a pretty fair idea when a searcher may convert.

By using target CPA, you leverage Google's machine learning to guide your campaign down a path that only bids on keywords, devices and 100's of other 'signals' that will drive more conversions at or under your CPA.


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How does increasing or decreasing target CPA affect conversion volume?

As a rule of thumb, the lower the CPA target, the fewer the conversions your campaign will get. The higher the target CPA, the more conversions you will receive. 

It is always best practice to make small incremental changes to your target CPA and watch how these changes affect your overall conversion volume.

The CPA vs Conversion volume balance is real.

The big question? Will target CPA make my AdWords campaign better.

The answer: It depends.

Turning on target CPA to manage your bidding can be ideal if you've already done everything you can manually.

You are also leaving the campaign in the hands of Google - sometimes you can't just beat good ol' manual management.

Before you turn on target CPA, make sure you've:

  1. Split tested all ads for at least a month
  2. Have at least 30 conversions in the past 30 days at the campaign level
  3. Created an extensive negative keyword list at the campaign level
  4. Created a 50/50 AdWords experiment.
  5. Prepared yourself for a campaign that may be a little rocky at the start as the machine starts to learn how to hit your desired CPA.