What Is Target CPA
Target CPA is an automated bidding strategy that allows the advertiser to pick a target cost per conversion goal and Google will then optimise the bids to reach this target. It is a great option if you want to maximise the conversions within your campaign. It uses machine learning and auction time bidding capabilities instead of you having to set bids manually.
Target CPA can be used to maximise any type of conversion, whether that be the cost per sale on an e-commerce website or cost per lead on a lead generation website. You must have conversion tracking for at least one type of conversion to be able to choose a CPA bidding strategy. It is also recommended that you have some data within the account so that Google can use the data to make better decisions at auction time. A good benchmark is around 30 conversions in the last 30 days.
How To Figure Out Your Target CPA
Google will predict which clicks will convert and also how much that click will cost. The bidding strategy does not use conversion value to hit your target CPA. However, even though Google is not relying upon conversion value to predict which clicks will convert, that does not mean you cannot calculate the target cost you wish to select.
It is fairly straightforward to determine what value you want to set for your Target CPA.
Step 1: Determine what your conversion rate is for leads. This could be phone calls leads, lead form submission, bookings etc. For example, say 1 out of every 20 people convert, this would then be a 5% conversion rate.
Step 2: Determine what your average customer value is. Say your average value per job is £200. You would simply Multiply your average value by your conversion value (200*0.2). This gives you a value of £40.
This means that to make a profit you need to get leads for less than £50.
There are a couple of things to keep in mind when opting to use an automated bid strategy like Target CPA.
Make sure you are not being too aggressive with your target conversion cost. If you set your target too low you may be limiting your visibility on google. This could lead to fewer conversions and a reduction in revenue.
Make sure you set your bid at a realistic target, such as just below or even at your break-even point. So from our example above, you could set it at 50£ and then you can slowly move toward your future goal. This will allow Google time to understand the changing bids and won't throttle your conversions.