Google AdWords saw its original launch back in 2000, but it wasn’t until two years later that they first introduced the Cost-per-Click bidding capability. Prior to that, early adopters would be charged every time their ad generated one thousand Impressions, whether users engaged with it or not.
Fast forward to 2018 and the AdWords platform has made incredible progress when it comes to effectively delivering ads to your target audience. As automated intelligence and machine learning algorithms have gotten more advanced, Google has leveraged these technologies into bidding strategies that can be deployed to meet your campaign’s goals more effectively.
What is a Target Cost-per-Acquisition?
A majority of AdWords campaigns will measure performance based on a conversion point, whether it be a form submission, phone call, app download or otherwise. As an advertiser, you should have an idea of how much money you’re willing to spend in marketing to generate each of these conversions – this number is called your Cost-per-Acquisition.
Total Media Spend ÷ Total Conversions Generated = Cost-per-Acquisition
How does this apply to Google AdWords?
Every keyword that you’re targeting will have varying levels of market competition and likelihood that a click generated is going to convert. In a traditional Cost-per-Click bidding strategy, you would use this information to set the maximum amount you’re willing to spend per click for each keyword in your account.
With a Target CPA bidding strategy, instead of setting bids at the keyword level, you’ll set what your ideal Cost-per-Acquisition is for that Campaign or Ad Group. AdWords will then automatically adjust your keyword-level bids based on historical conversion and auction data, with the objective of generating conversions as close to your Target Cost-per-Acquisition as possible.
How Does It Work?
When you implement a Target CPA bidding strategy, Google AdWords will analyze all the data you’ve generated in the account and continually search for any positive or negative trends. It will look at all types of information, everything from the user’s browsing device to the time of day. Once any trends are identified, it will begin to adjust your bidding strategy to focus on what has been working well and be more conservative towards any targeting that hasn’t been as successful.
While Target CPA bidding can be incredibly effective, it’s definitely not a strategy that you can implement and forget about. Here’s a few best practices when it comes to setting up and optimizing your campaign:
- Set a realistic target: everyone would like to see their CPA as low as possible, but keep in mind that you’re still entering the same auction process to show your ad over competitors. Setting a Target CPA that’s too low will directly impact how often your ad is seen and how much traffic is driven to your website.
- Monitor performance: similar to any other bidding strategy, you should continually evaluate how Target CPA is affecting the return you’re seeing from your campaign. It will take time to generate data and identify trends, but don’t be afraid to adjust the goal or targeting based on the information you’re seeing.
- Match your strategy to your objective: make sure your campaign’s bidding strategy reflects your end goal. For example: Target CPA bidding likely won’t be the best fit if you’d like to run a branding-focused campaign that generates as much traffic and awareness as possible.
For more information on how you can maximize the return you’re seeing from your paid media campaigns, contact Zero Gravity Marketing today.