Target CPA in Google Ads – Everything To Know About [2023 Complete Guide]

As you may already know, Google Ads has developed and refined many complex bidding strategies. Going from the trusted manual bidding to the all-new machine-learning-enhanced Target CPA & ROAS. Picking the best strategy for your campaign and needs is less simple now, let alone optimizing the smart bidding strategies. Here we’ll dive deep into the Target CPA bidding strategy in Google Ads, focusing on what it is, when to use it, the pros and cons, how to optimize it, and best practices.

If you are curious to learn a bit more, check out our article on the other bidding strategies in Google ads.

What is Target CPA in Google Ads?

Target CPA (cost per action) is a fully automated bid strategy that aims to generate as many conversions as possible within the target cost-per-action you have pre-defined. It optimizes the bids according to the conversion data in order to maximize the clicks that will convert and minimize any unnecessary spending.

When you select the Target CPA (cost-per-action) bid strategy, you set your desired average cost per conversion. Google Ads uses your Target CPA to set a bid based on the likelihood of the ad to convert.

Target CPA is available as either a standard strategy that is applied to a single campaign or as a portfolio strategy that can apply to multiple campaigns.

The strategy uses historical data to predict which clicks are more likely to convert and then adjusts bids accordingly. As a result, target CPA focuses on optimizing the cost per conversion rather than the overall conversion value.

Target CPA bidding has evolved over time, with Google making improvements to the algorithm to help advertisers get more conversions for their budget.

How Does Target CPA Work?

Target CPA bidding uses your campaign’s historical data, conversion settings, and other signals like user interests, devices, locations, time, etc. to best optimize the strategy and deliver as many conversions close to the target CPA.

By leveraging machine learning and historical data, Target CPA bidding adapts in real-time to ensure that your advertising spend is allocated where it can yield the best results.

That’s why when using this bidding strategy it’s crucial to have your conversions set up correctly and working properly. For some conversions, Google will spend more, for some less, but in the end, the average should be close to your defined target CPA.

When Should You Use Target CPA?

You may be still asking if the target CPA is the one you should pick. When should you use it? Mainly you need to answer two questions:

  1. Are you trying to generate more conversions?
  2. Is it important to pay only a specific amount for each action?

If your answer is both yes, then you should go with the target CPA bidding strategy. This approach is most effective when you have a clear understanding of your desired cost per conversion and are focused on achieving that goal. It is particularly advantageous when you have the flexibility to allocate the necessary budget to meet your target cost. Additionally, having a history of 15-30 conversions in the last 30 days allows the algorithm to optimize your campaigns more effectively.

By meeting these criteria, you can ensure that Target CPA is utilized in an ideal scenario, maximizing your chances of achieving your desired cost per conversion and generating successful conversion actions

(Note: This is not always relevant especially when it comes to brand campaigns. For these types of campaigns, better fits are Maximize Clicks, Enhanced CPC or even maybe Target Impression Share bidding strategies.)

How To Set Up Target CPA in Google Ads

So then how do you set up the target CPA strategy for your campaign, here are the 7 steps to follow:

  1. Sign in to your Google Ads account
  2. Select the Campaign
  3. Choose “Settings”
  4. Pick the “Bidding” section
  5. Select “Conversions” under “What do you want to focus on?”
  6. Make sure to tick the box for “Set a target cost per action”
  7. Define your target CPA & then “Save”

If you would like to adjust or edit the target CPA strategy the steps are simple. Follow the previous guidelines until step 4 and skip directly to step 7 where you would adjust and then save your new target CPA.

Best Practices For Target CPA Bidding Strategy

When using a fully automated bidding strategy in Google Ads you lose a lot of control over the things you can do to manage the campaign. Most of the work is done automatically behind the curtains by the algorithm and it leaves you with very little room to be part of it. Because of it, you need to be careful when working on it and so here are our best practices for target CPA:

  • Make sure your conversions are on point: This step is crucial to the success of your campaign using the target CPA. To put it simply, good conversion tracking in Google Ads is essential, if you are tracking the wrong conversion, you are optimizing and spending your budget for actions that won’t generate the results you aimed for. So, 1) Check if your conversion tracking is set up properly and you are tracking the right conversion action, and 2) Make sure you define in the settings what conversion action your campaign is going to optimize for.

  • If unsure what target CPA to set, start with the suggested one: When first starting out it can be hard to know exactly what target CPA to set for your campaign. If your campaign has been running for a while and you are switching to a target CPA strategy then you can start with the recommended and adjust later accordingly to the performance and your objectives. If you are creating a new campaign, but you have other campaigns that have been running in the past you can check their performances and make some basic calculations for what your target CPA should be. In the case this is your very first campaign, it would be better to start with a max conversions strategy until you generate your first conversions before switching to target CPA. Or if you are still having some budget constraints, you can start with eCPC strategy to better control your spending and then move up to target CPA once you have gathered enough data to be able to change strategies and set a target CPA.
  • Be patient with automated bidding strategies: Once you’ve selected the target CPA strategy, your campaign will enter the “learning period” during which the algorithm will try to figure out what types of customers and behaviors will yield the best results. This period may take a week or so and you need to be patient with it. During this period the KPIs will fluctuate a lot because the algorithm will be testing different combinations until it finds the most optimal one. Some combinations will work better than others but don’t panic, let it do its thing.
  • Don’t make big and frequent changes to the campaign: After your campaign has been running for a while you’ll most probably look into making some adjustments to improve or sustain the performance. However, you need to be careful with the changes you plan on making because some of them may be big enough to set the campaign back to the learning period. This is present across all automated bidding strategies. So, changes to the budget, the bidding strategy, the conversion actions, any big fluctuations in the budget, multiple changes in the settings of the campaign, and bulk changes with the keywords, ad groups, and/or audiences may set the campaign back to learning mode. (Note: when making changes to your campaign, even if they are small ones, some subtle shifts in the performance may occur, but the campaign should adjust quickly. So when making changes try to make small ones and not too frequently)
  • The more data it can get, the better it’ll be: This is quite simple when the campaign is learning and testing, the more data it can get the faster it will learn and the better it will be. If you limit the campaign too much with a small budget, the learning process may take a bit longer to complete. The same is applied when the campaign is no longer learning, small budgets can limit the campaign’s performance. If you don’t have more budget, you may want to make adjustments in the campaign or the settings to satisfy the needs of the campaign with the available budget.

How To Optimize Target CPA (& Other Automated Bidding Strategies)

As we have mentioned before, when using automated strategies you don’t have much room for input. But there are still a few things you can do to set the campaign on the right course. Here’s what to look out for and what you can do:

  • Keywords: Effectively this applies only to Search campaigns where keywords are used for targeting. But adjustments in your keywords can help you automate the campaign. You can’t adjust the bids, but you can select what keywords you are going to target and also the match type. If you are looking to expand the campaign, generate more conversions, and increase spending while still maintaining a similar CPA you may want to add new keywords or test out phrase or broad match type keywords. On the other hand, if you are aiming to narrow down your strategy, optimize the performance, and restrain the budget you may want to focus on the best-performing keywords, pause the underperforming ones and focus more on phrase and exact match types rather than broad ones. (Note: make sure you add negative keywords and continuously update them. This will guide the algorithm and help you improve the performance of your search campaigns)
  • Audiences & Demographics: This adjustment will be applicable to most of the campaigns, as long the audience is set up to “targeting” compared to “observing”. The changes will depend on what your objective is, if you are looking to expand the campaign, then you may want to look into adding additional relevant audiences to target and potentially increase the reach of the audiences. If you are trying to further optimize the performance then you may want to narrow down on the best-performing audience, limit the reach in the audience setting, and adjust the audience criteria to the best-performing criteria. The same applies to the demographics. Adjust the gender, age, and parental status according to your objective. For more details, check our article on Google Ads audiences.
  • Placements & Topics: Changes to the placements and topics are only relevant to Display and Video campaigns. The principle is again the same, if you are looking to expand, generate more conversions, and still maintain a similar CPA then look into adding more placements and/or topics to target. If you need ideas for placements to target, check the “Where ads showed” section to see on which pages/apps/youtube videos/channels your ads have appeared. You can sort by performance and include those in your targeting. For topics, you can apply the same logic. (Note: just like with the keywords, you can also add placements and topics as negatives. This can really guide the campaign on the right course and deliver the best results)
  • Ads & Extensions: Regardless of what type of strategy the campaign is using, your goal will always be to optimize and create the best ads possible. A rule of thumb and best practice is to have at least 2 expended ads and 1 responsive ad in each ad group. Keep experimenting with different headlines, different descriptions, and different ad extensions too. Make different combinations of your ads and see which ones perform the best. To see which headlines and descriptions are working the best in your responsive ads and which ones need updating, check the Google Ads Assets Report. Keep updating the responsive ad with better headlines and descriptions. Use call-to-action, communicate values that your customers are looking for, use numbers, and stay up to date with new updates. Google is introducing different types of extensions often so try to test them out and use as many of the extensions as possible as long as they are relevant to the type of business.
  • Locations: Making adjustments in your locations can be a big game changer and it’s applicable to almost all of the campaign types in Google Ads. Expanding or decreasing the radius and/or the number of locations you are targeting can really help you expand or narrow down the campaign. Adjust the sizes and the number of locations you’re targeting according to your objective. With the locations you can also exclude the ones you don’t think will perform well or places where your business is not operating but the same language is spoken. For example, your company is running in Canada and the US, but not in Australia and the UK. If you aim to only target Canada and the US you should also exclude Australia and the UK. If you are targeting the English language your ads may end up showing outside of Canada and the US where English is spoken and waste your precious budget without any results.
  • Devices: The principle here is quite simple, there are mainly 4 different devices, phone, tablet, desktop, and TV screen. If you want to reach the most customers possible and generate as many conversions within the defined CPA aim to be present on as many devices as possible. If you are aiming to optimize the campaign and improve the performance, focus on the devices that really work best for you and play with the bid adjustment, but be careful because they can have an impact on the strategy.
  • Ad Schedule: Making adjustments to the time your ads show can also be a real help when optimizing your campaign. You want to monitor when your campaign is performing the best. What hours of the day and what days of the week? You can adjust and tweak them according to your goal. If you are trying to open up, increase spending and generate more conversions, test different hours and find the ones that work the best within your target CPA. And if you are trying to narrow down your campaign and improve KPIs, put focus only on the hours and days that bring you the best results at the desired CPA.
  • Bid Adjustments: Be vigilant with this because this can have a big impact on your strategy. Bid adjustments do behave differently according to the bidding strategy, but they have a significant impact especially when it’s an automated one like target CPA. Because when you increase or decrease the bid adjustment for devices, location, or ad schedule you are directly impacting the CPA. So by increasing any of the bid adjustments your strategy becomes more aggressive which can result and more spending but fewer conversions and hence increased CPA, and vice versa. So make your bid adjustments sparingly. Check out our article to learn more about the bid adjustments.
  • Languages: The language setting can be a subtle change but can still help you with your campaign. If you are targeting multiple languages or even all languages you are open to the maximum number of customers possible. But if you are specific with only a selected language then your targeting is limited to only those customers and your performance should be a bit more optimized.
  • Impression Share Lost To Budget & Rank: A metric you may want to keep an eye on while optimizing your campaigns is the impression share lost due to budget & rank. It’s a bit more advanced, but to make it simple, if you lose impression share because of budget then it means that you can the campaign could show up still to more people and deliver on performance without impacting the average CPC and your budgets. So if you do have impression share lost to budget, you are happy with the CPA you are getting and you would like to increase the volumes, you can try increasing your budget by 10%-20% and follow the performance. However, if you are not in a position to increase budgets, you can let the campaign run the way it is, or maybe try narrowing down some of the criteria mentioned above to even out the budget available with the aggressiveness of the campaign. (Note: make sure that the target CPA in your settings is actually the one you are aiming for. Because, if your campaign is doing well and generating the desired CPA, but your target CPA is higher in the settings then by increasing the budget you will give the campaign more room to try to get closer to that target CPA in the settings. It was performing well because it was limited by the budget, but now that it has more it will try to achieve the CPA you have set and you will see the CPC and CPA increase. Bear that in mind). On the other hand, if you are noticing that you are losing a lot of impression share because of rank but not because of budget then it simply means your campaign is not competitive enough but it has a budget available to be spent. It may be that you are too restrictive with the target CPA or you have very narrow targeting. You may want to try different ways to expand your campaigns by adjusting some of the above-mentioned criteria. In the case you’ve exhausted those options, you can either increase the target CPA to let the algorithm bid more aggressively and spend the budget available, but note that your CPC and CPA will increase, or you can simply lower the budget so that the playing field is even between the campaign’s aggressiveness and the available budget. (Note: you may also want to check your competition because it also could be that you have new competitors or existing ones that are bidding more aggressively)

(Pro Tip: to discover if some audiences or topics work well and minimize the risks of ruining your campaigns, you can first add them to your campaign and set them to “observing” and if you seem confident that they’ll perform well you can set them to “targeting” afterward)

Key Takeaways

  • Target CPA in Google Ads bid strategy is perfect if you are aiming to generate conversion actions for a specific cost
  • Don’t forget that with target CPA you won’t have the same control as you would with more manual strategies
  • Be patient with the campaign optimizing for a target CPA, take it step by step, and make small changes one at a time
  • Keep analyzing the performance and optimize your target CPA campaigns by adjusting various criteria according to your objectives

FAQ

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