If you measure the effectiveness of your AdWords advertising by tracking conversions, max CPA bidding is well worth experimenting with. Here a just a few of the reasons why:
1. Increased conversions, and reduced cost per conversion.
Unlike automated bidding to optimize for clicks, max CPA bidding focuses on achieving the end goal of your advertising efforts, conversions! It’s not always a good idea to let the AdWords machine make your decisions for you, but if you can get more sales for a lower cost per acquisition, then why not let the AdWords machine do it’s thing? In order to qualify for a CPA campaign, you have to have some conversion data already (15 conversions within 30 days). There is a lot of user information the algorithm incorporates that you don’t have access to. Once you establish a baseline for acquiring conversions, let the Google machine use all the resources at it’s disposal to help you achieve your goals. It knows more about your customers search habits than you do, don’t fight it! Just like quality score, all the factors that go into the decision process may be unknown, but if you let that stop you from experimenting with CPA bidding, you will never gain the benefits.
2. Fewer “irrelevant” impressions and clicks.
Because the Google is machine knows so much more about individuals search habits than Google will ever tell you about, the system knows – per impression – whether or not that particular user is likely to convert. There is a possibility when using max CPA that even with a reported 100% impression share you may not show an ad for every possible impression, but it’s very rare that every impression results in a conversion anyway. Who doesn’t want a higher return on ad spend for lower costs? One of the biggest challenges of advertising (regardless of medium) is determining user intent, and what stage of the buying cycle a potential customer may be in. If the magical mystery machine has a better idea of that specific users intent, and what stage of the buying cycle they may be in, it’s more likely to result in a profitable cost per acquisition, with less “wasted” costs.
3. Your max CPA can exceed your daily budget:
When I first realized this, I had one of those “oh s#$%!” moments. 🙂 How often has another advertiser with deeper pockets, higher quality scores, or no sense of what a profitable cost per conversion is pushed you off the first page, or out of the top position? Especially for small business advertisers with limited budgets, a profitable CPA may be higher than the average daily budget. You can set your max CPA to whatever the maximum profitable cost per acquisition is for your conversion event, regardless of your daily budget. You will still not spend more than +/- 20% of your daily budget for any one day (averaged not to exceed your allocated monthly spend), but if the Google machine knows that the particular user is likely to convert, it will bid whatever is necessary to place your ad in the most likely to convert position for that impression, within your daily budget.
4. Higher average position/adrank :
Points 3 and 4 go hand in hand. Since the Google machine knows that the higher position ads tend to convert at a higher rate, using max CPA bidding you are more likely to achieve that higher position per impression. Again there is the possibility you might not show an ad for every possible impression, but you want to make sure your ad is shown in the most likely to convert position for the most likely to convert users. If clicks in the lower positions don’t convert, but still cost you money, you don’t want to accrue impressions and clicks when your ads are in those positions. Quality score and max bid still apply to the adrank equation, but with max CPA bidding – the same quality score can achieve a higher adrank when it matters the most. Again, the Google machine knows more about that specific users behavior in each impression instance, why not let it go ahead and achieve a higher adrank for you?
5. Max CPA bidding requires you to think differently about campaign structure:
“Best practices” aren’t always best. Highly themed, relevant, adgroups makes for a good talking point – After all it’s such a subjective statement you could always claim that an adgroups lack of performance is simply because it is not “relevant”. The meaning of relevancy changes when you use CPA bidding. Would you consider increased sales at a lower CPA relevant to your advertising goals? If so, who cares about how many or few keywords or targeting methods are used per adgroup?
If you are using a conversion based approach to your CPA campaigns, structure your adgroups in such a way as to allow the Google machine to more effectively achieve that goal. Because the bidding takes place at the adgroup level, any keyword or targeting method that skews the average CPA of the adgroup needs to be in it’s own adgroup. Blue widgets and cheap blue widgets may seem like they fit into the highly relevant, tightly themed, best practices mold for the adgroup, but if one term generates far more conversions at a lower CPA, that is an entirely different theme than the rest of the keywords in the adgroup.
With CPA enabled campaigns, you want each keyword / targeting method in each adgroup to be as close to each other as possible in both conversion rate, and cost per conversion. Much higher or lower performance of any keyword will negatively affect the performance of the adgroup as a whole. With max CPC bidding, you can control these “rouge” keyword bids individually, and this leads to the impression that the “theme” of the adgroup is more important than the performance of each keyword. The “theme” of CPA adgroups has to be centered on conversion performance to be effective. That is your ultimate goal is it not?
Putting in the effort to isolate and optimize your highest converting terms / targeting methods in the short term, will always be worth the effort in the long run – Regardless of bidding method. Optimizing with max CPA bidding, can lead to even greater benefits over the course of time. Try it for yourself. One further word of advice – All good things come with time. The more time and conversion data the Google machine has using max CPA bidding, the better the results. BE patient, but as always – Do what works best for you!