What Is Target CPA in Google Ads – How to Optimize Your Ads

You can be sure of two things if you are running a business these days. One – if it’s small, some big player will want to buy you out in a matter of years. And two – you just have to put out Google Ads.

And there is a reason for that. For starters, just think about it from a logical standpoint. You are a business owner who is trying to reach as many conversions as it is humanly possible. You want people to come to your shop, buy your services, whatever it is that you do. How can you tell them about that? Well, you can put out an ad in a paper. That is something that people are not interested in. You can do a video ad on TV. But then again, it will be watched by someone who may not be interested in what you do. So, a significant portion of this money will be wasted.

Alternatively, you can create an online ad that will reach hundreds of thousands more people than any traditional medium could, with precise target audiences that are all about your product. And it will probably be cheaper at the same time.

So, in this article, we will be going over the Target Cost-Per-Acquisition, how it works, especially in Google Ads, how to set it up, and what you should focus on in that regard. We will show you how to optimize your target CPA strategy on the Google Ads Platform, why you should use automated bid strategies in the first place, and why it may not be the best course of action.

Let’s dive in if you want an intelligent bidding strategy for your ad efforts!

This article is a segment of a more extensive piece about Google Ads Metrics.

What Is Target CPA?

Let’s start with defining what exactly CPA is. The acronym stands for Cost-Per-Acquisition. It’s a manual or automated bidding strategy used in many different platforms, most notably in Google Ads. Those practices are crucial for getting more clients, managing the expectations of campaign types, and getting as many conversions as possible to the website.

The right approach can directly impact your average Cost-Per-Click (CPC) and cost-per-action (CPA) and help you reach new clients and markets. Of course, it’s not as simple as clicking a button. You can choose to do your best practice and set everything automatically if you have enough data experience and can develop new keywords quickly, or you can automatically set your ads, and the platform will do everything for you. Here’s what it’s all about in a step-by-step form.

Create a Target CPA

The first thing you need to do is to set your budget. Only then will you be able to start driving conversions to your website or social media page. The maximum amount of money spent on a single mutation is called CPA. Specific CPA could be higher or lower depending on what kind of keywords you are working with. Some search terms are expensive, so you must adjust your cost-per-conversion accordingly.

Optimize for the Algorithm

The next thing that will happen is algorithm optimization. Many algorithms will behave differently based on what you will feed them. For example, if you have historical data full of ads shown to women and are now trying to advertise for men, you will have to optimize it for the algorithm to know what you expect. Additionally, you need to use the real-time signals to make your CPA work. With increased competition in the market, you will have to adjust your ads more frequently. Set a target cost per acquisition and available budget according to your needs.

React!

But it’s not the end of the road in most cases. You will need to react and change the ad based on data points you have received from the platform. When it’s an automated bid strategy, the algorithm will determine relevant information and decide how to spend your budget among your accounts. If you do it manually, you will have to set everything from scratch with even such details as device type, location, and browser. Add a remarketing list to your ad, as those are highly effective.

Monitor!

Be sure to constantly monitor your campaigns. The best indicator that you are doing something right is if your CPA is lower than your target return. It means that you get more conversions than your maximum budget. With the CPA increase, you can wonder if you need to make some adjustments as your conversions are getting more expensive. The same happens if you suddenly get fewer conversions – the same logic. Sometimes, you will have to make some adjustments, whether it’s a display network problem or maybe the ad is not working correctly on mobile devices where everyone is. Your account performance is based on that, so consider that.

Target CPA Benefits

So, now that we know what we are talking about, let’s go over the target CPA bidding strategy benefits you can spot. Of course, those are the most common ones happening for most users, but you can see some other ones specific to your particular line of work. Additionally, as all things are – it’s not for everyone, and those campaigns may not be best for all lines of business. 

A Pay-Per-Click campaign’s performance can also depend on many factors, like the quality of your landing page and how attractive your product is. If you are selling heavy machinery for some big players, you don’t need to spread the word about it on the internet. You may be much safer with just hitting up the big players on LinkedIn or during tech shows. 

Cost Management

One of the most significant advantages of PPC campaigns and target CPA optimization is that you have total control over your budget. You will not spend a dime more than you have informed the platform that you are willing to pay. So, if the advertising budget is something that you need in your life, then using target CPA for your PPC campaigns is a great way to go about it.

Data-Driven Decision Making

With such a significant amount of data, you can make even better decisions when it comes to optimizing your campaign, so the people you will be targeting will be much more likely to convert. You will be amazed at how much information you gain from this campaign management. The number of people interested, their demographics, how they behave online, what they do – it may be scary, even how deep you can get to know more about your audience.

Time-Saving

Additionally, when you opt for automated bidding, you will have much time regarding your campaign structure. If you set your campaign the right way, you will quickly notice that Google’s or any other platform algorithms are pretty good and find out what you need and how you can accomplish it most efficiently.

Optimize Conversion

But you can always opt-in for the manual targeting of your ads. That way, you can take control of your conversions and optimize them according to your needs. Even the best algorithms may not understand what you are trying to do, so creating a specified target CPA can help you get how many conversions you want. Just set up your daily budget, and you are good to go!

Ad Performance Optimization

With a target CPA, you will also be able to optimize the ad performance of your campaign based on the various data you will receive from the platform. From such essential elements as the number of clicks and impressions to something more advanced like conversion rate, quality score, etc., you can change the outlook of your campaign in a matter of seconds.

Flexibility

And – it allows you more flexibility. A target CPA can help you create campaigns for many products or services and optimize them according to your needs. With target CPA, you will be able to use the information you have put into the campaign, the historical data, etc. If you opt-in for automated bidding, you can quickly see that it’s much faster, especially compared to traditional methods.

Review and Optimize

And finally – the target CPA will allow you to review and optimize everything in your campaign based on dozens of pages of quality data. And, in return, it will create an even better ad in the future. So, in essence, there are no downsides to this process, so use it, optimize it, review it, and go back to point one.

When Should You Use Target CPA?

But, as it turns out, this advertising is not for everyone. Of course, everyone can use it, but not everyone should. CPA bidding can be great, but it’s not for every business. So, to find out if your business is the one that should invest your time and money into this kind of advertising, be sure to check these things out before getting into it.

Clear Goals

The most important thing when deciding whether you need a PPC campaign with a target CPA bidding is having clearly defined goals for your campaign. It can be anything from brand recognition, getting more clicks, dining out more customers, conversions, leads, whatever it is – you need to know what you want before starting the campaign, as it will not work if you do not tell it how to work. It’s as simple as that.

Good Historical Data

Another big thing about this kind of advertising is having an extensive historical dataset to create a target CPA more efficiently. To make the most effective use of this kind of advertising, you will need to present the algorithm with lots and lots of historical conversion data so that it can duplicate it and make predictions about what would work in your particular situation. Of course, it does not mean that only if you have tons of data will you be able to use this method, but it will help. A lot!

Limited Time and Expertise

Additionally, if you don’t have much experience setting up campaigns, it’s much wiser to set a target CPA and let the algorithm do its things. It will usually do the right thing, as it has hundreds of years of online experience and the amount of data humans would be unable to comprehend. Additionally, you can adjust it based on your needs, like if you have seasonal campaigns or need to broaden the audience scope as you introduce new products for the project. There are plenty of things that you can do to get to your ad group with an automated bidding strategy.

Budget Positive

Setting a target CPA can be great for optimizing your budget. You will have much more control over it; you will be able to get to your ad groups more efficiently, and, on top of everything else, when set the right way, you will pay much less for much more. A fully automated bidding strategy with a target Cost-Per-Action system can do great for your company. Whatever it is that you need.

Testing

Finally – a target CPA bidding is excellent if you test new campaigns for your products and services. You will see a lot of data from trying out some cheap ads, seeing what works and what does not, and what is the ad landscape for this particular product/service. Additionally, automating CPA for a specific purpose can give you additional insight into other campaigns. You can optimize them then on multiple levels!

When Not to Use Target CPA?

But – it’s not all bed and roses for everyone. Sometimes, it may not be your business’s most effective strategy. You may need to change the campaign to work for your benefits manually. Maybe another medium would work better for you, as with the heavy machinery example. There are plenty of PPC strategies that you can use to change things up in your campaign, and target CPA bidding is only one of them. So, let’s review some of the key reasons why you should not opt for that particular one and try another smart bidding strategy. 

Limited Data/Budget

Let’s start with the most obvious one – if you don’t have money, you should probably not go into this line of business. Target CPA bidding is not the cheapest option, although it can save you some money in the long run. Additionally, it relies heavily on historical data. Although it does not make it impossible to use it without it, you will be practically building the historical data for that purpose with your own money. So – it may be easier to use other strategies for starters.

Conversion Issues

Additionally, it may be wise to use other strategies if you need to have many different conversions for your particular product or service. For example, Target ROAS (Return on Ad Spend) bidding is excellent for this specific campaign, as it is explicitly used for maximizing your revenue. And you may consider different strategies for different types of conversions.

Campaign Issues

Next, if you are just starting with a product or testing some new markets, it may be problematic to use target CPA bidding. Doing everything manually may be more effective than relying on the algorithm. You will know everything about the market your product has never been in. If you have a more advanced campaign, the target CPA may not be the best solution for you.

Unpredictable Market 

Additionally, if you are in a somewhat unpredictable market, you may want to opt-out. If everything is changing rapidly, you will not be able to change your strategy as fast with the target CPA bidding. It’s automating the process in some ways based heavily on historical data, so it may not notice the changing of everything in sight. So, if you want to have more control over your bids, we suggest you try other PPC strategies.

How Does It Work in Google Ads?

So, how to get our target CPA bid strategy going in Google Ads? Let’s find out! Like in most cases, the CPA is pretty easy to set up. Here is how Google Ads is calculating it:

• CPA = Total Cost / Total Conversions
• Total Cost is how much money you have spent on Google Ads
• Total Conversions is the number of, well, conversions

As you can imagine, it’s pretty easy to calculate it. If you put 100$ into Google Ads and get 10 people buying your products, the CPA cost is 10$ per conversion. And this is the metric that you need to set up in order to get better results. You may put 5 dollars per conversion and see if it would work well for your campaign. As we have noted before – you should rather be a bit under the CPA to make it effective.

How to Set up Google Ads Target Campaign

Let’s now go over the process of setting up the target CPA bidding in Google Ads. Here’s how you do it:

• Campaign Creation or Editing

Here, you will need to create a new campaign or edit an existing one. That will enable Target CPA bidding. Then, you will have to choose what is your goal for this particular campaign. 

• Campaign Settings

Next, you will need to choose the settings of your campaign. That would include the name, budget, where it should be presented, in what language, etc. What you choose will depend on your particular needs.

• Bidding Strategy

Then, go to the Bidding section of your campaign and click on Change bid strategy. Select Conversions as your campaign goal and Target CPA from the list of smart bidding strategies.

• Additional Configuration

There are a couple of tweaks and turns you can do in order to optimize your campaign. You can change conversion actions that you want and bidding limits so that you can have more control over them.

• Conversion Tracking

Be sure to set up your conversion tracking in your Google Ads account, as it will help you to see how your conversions are performing.

• Learning Period

And finally – be sure to wait for the learning period of the algorithm to end before panicking that it is not working properly. It will take time to maximize conversions, but with the right bid strategy performance monitoring, you will get your defined target CPA in no time.

Monitor and Optimize

After setting up your campaign, be sure to regularly monitor and optimize your campaign. Whether this would mean getting higher conversion volume, adapting to the ever-changing circumstances, or just creating a completely new set of keywords – target CPA bidding is one of the easiest to navigate and great for optimizing. Be sure not to just set it up and never look at it again, as the algorithm is not ever-knowing and sometimes can create not-so-good results for your campaign.

Google Ads Bidding Strategies

In good spirits, let us go over some of the key Google Ads bidding strategies that can help you out in your endeavors.

• Target CPA Bidding

As we have explained multiple times in this article, this strategy is pretty simple – you set up the maximum cost-per-conversion, enter all the important data, and then let Google’s algorithm do the rest.

• Conversions Optimization

Here, you focus on getting as many conversions as possible within your budget; it doesn’t matter what the CPA is.

• Enhanced Cost-Per-Click (ECPC)

Here, you need to adjust your bids manually in order to optimize conversions. 

• Return on Ad Spend (ROAS)

And finally, we have the Return on Ad Spend (ROAS) that we have mentioned before. It’s great for e-commerce, for sure, as it optimizes bids in order to get as much revenue back as possible.

What Is Target CPA in Google Ads?

And here we are, at the end of our road! We hope that now, with our help, you know everything there is about Target CPA Bidding in Google Ads! Of course, this is a rather broader topic, and we would probably have to create a whole book on all the techniques and strategies that can help you out in setting your campaign, but we hope that this is at least a good starting point for you to do some more research.

The topic of target CPA bidding is an interesting one, as it shows how you can improve your PPC campaign results easily and without too much effort. In the long run, it’s great for the businesses who have a long history of advertising and historical data to take from. Additionally, it can save them a lot of time and money in the process, as it will optimize for the most effective conversions, whatever they may be.

Thanks for stopping by! We hope that you enjoyed this article on target CPA in Google Ads. If you liked this one, be sure to check out other articles on our site! We have a lot of those, so we are positive that you will find something for yourself.