What Is The Cost-Per-Acquisition Model?
Target CPA is an automated bid strategy which is used to set bids in order to get as many conversions as possible at the set target cost per acquisition. The target CPA is the average amount an advertiser would like to pay for a conversion. The acquisition process works by using historical performance data from a campaign and automatically finding an optimal cost-per-click for each ad each time it’s eligible to appear. When advertisers choose a target CPA, they are telling AdWords to get as many conversions as possible for the target CPA. AdWords will automatically set an ad’s bid to achieve an average CPA equal to the target set across all of the ad groups and campaigns that are using the CPA strategy.
AdWords tries to keep the cost per conversion equal to the target CPA set, but some conversions may cost more than the target and some cost less. The fluctuations in the CPA occur because the actual CPA depends on factors that are independent of Google’s control, like changes to the website, changes to the ads, or increased or decreased competition in ad auctions. These factors determine whether the actual conversion rate is lower or higher than the predicted conversion rate. Also keep in mind that the “target CPA” optimizes bids based on real-time data so existing bid adjustments are not used. However, there is an exception to mobile bid adjusts of -100%.
AdWords will recommend a target CPA after an advertiser has created a bid strategy and chosen which campaigns to apply it to. The recommendation is based on actual CPA performance over the previous weeks. The Target CPA set may influence the total number of conversions. If a target CPA is too low, it may cause AdWords to forgo clicks that may have resulted in conversions, which results in fewer total conversions.
Before getting started with Target Cost-Per-Acquisition, a campaign will typically need to meet three requirements.
- The AdWords account needs to be tracking conversion data.
- The ad group or campaign needs to have received at least 15 conversions in the last 30 days.
- The ad group or campaign needs to have received conversions at a consistent rate for at least a few days.
There are two types of bid limits that advertisers are able to set. However, setting bid limits for the Target CPA is not recommended because it may restrict AdWords’ automatic optimization of your bid. If bid limits are set, they’ll only be used in the Google Search Network auctions. Bid limits are only available for portfolio Target CPA bid strategies.
- Maximum bid limit is the highest maximum cost per click bid that an advertiser wishes AdWords to set for any keywords, ad groups or campaigns using Target CPA bidding.
- Minimum bid limit is the minimum cost-per-click that an advertisers wishes AdWords to set for any campaigns or ad groups using the Target CPA strategy.
Conversion bid metrics allows AdWords to tell which of the two conversion measurements it should use in an automated bid strategy. The two options are “conversions” or “converted clicks.” Conversions is the default bid metric setting and is the recommended conversion metric because it works best for achieving advertiser goals. In order to use “converted clicks” as the conversion bid metric, advertisers need to opt into “include in ‘conversions’” for all of their conversion actions. The Include in “conversions” setting allows advertisers to decide whether or not to include individual conversion actions in their ‘conversions’ reporting column. The conversions recorded affect the bid strategies like target CPA, target ROAS, and enhanced cost per click so that the bid strategy will optimize based on conversions that you’ve chosen to include. With “converted clicks” advertisers can set a count setting to “every” or “one” conversion per click for each conversion action. The setting of “one” will make a conversion count closer to what it was with “converted clicks” as the bid metric.
Another option is the include cross-device conversions which lets you include cross-device conversions in their conversions column and in their conversion based bid strategies.