Target CPA is one of several automated bidding tools Google has launched in recent years. The technology automatically adjusts bids so that retailers can achieve a pre-set Cost-Per-Acquisition (CPA). Google’s goal is to streamline as much of the advertising management as possible, but retailers still have questions around whether a set-it-and-forget-it approach can achieve their unique and often complex marketing goals.
In this installment of Keeping Up With Google, a series that informs our readers on the latest changes to Google Ads, we’ll explore what Target CPA is and how it can impact retailers’ performance marketing strategies.
First known as “Conversion Optimizer,” which launched in 2007, Target CPA was re-released as a smart bidding tool in 2013, alongside Target ROAS and Maximize Bids.
What It Does:
Target CPA is a bidding tool that aims to capture as many conversions as possible at a set CPA. Google automates CPC bidding in order to capture conversions at the retailer’s defined threshold. Retailers can set Target CPA for ad groups, individual campaigns, or across multiple campaigns within Google Ads.
Google refers to historical data about the given campaign and uses real-time auction data to make a decision on the final bid. The auction data includes information on device, browser, location, and time of day.
Some conversions may incur a higher or lower cost than the Target CPA. Google reports that these fluctuations will average out over time so that, on average, the cost is close to the Target CPA. How Google measures this is unclear because there is no reporting on when Target CPA is used to set bids.
Although retailers can set the Target CPA at whatever level they would like, Google will recommend a target based on a campaign’s historical performance. If retailers set a Target CPA for a new campaign, Google will base its recommendation on historical performance of other campaigns in the retailer’s account.
Retailers will need to implement conversion tracking for their products within their Google Ads account in order to implement this bidding tool.
In December 2018, Google announced an additional Target CPA feature. When retailers implement this bidding tool for standard or smart display ads, they have the option to pay for conversions instead of clicks. For example, if a retailer set a Target CPA of $15 and they earn 10 conversions from their display ads, they will pay $150. Retailers cannot set a Target CPA above $200 when using the pay for conversions feature.
Target CPA is available in the Search and Display networks. It is not available for Google Shopping.
What Does It Mean for Your Business:
Target CPA is another Google automated bid feature that provides advertisers a more hands off approach to their account management. By setting a Target CPA, marketers allow Google to set the spend thresholds for individual auctions and automate bid management. Often retailers who are new to Google Ads and unsure how to build a channel strategy turn to bidding tools like Target CPA for a set-it-and-forget-it solution.
Retailers do not typically use CPA targets as their goal of choice because of the dynamic nature of pricing and desire for profitability. Revenue typically needs to play some role in the equation. CPA could be used in some cases for new customer acquisition or for lead generation.
It’s important to note that Target CPA is not an ideal solution for retailers looking to grow revenue on Google Ads. The main limitations are that retailers have no control over bids, they don’t have insight into the specific bids being set, and bids are only managed to one goal, which is CPA.
Managing to static goals like Target CPA can limit retailers’ ability to grow their business. The most successful retailers regularly adjust their strategy as seasonality shifts or changes in their business occur, which Google cannot necessarily track within its platform at this time. Regularly assessing and adjusting goals on Google Ads helps retailers deliver their ads to the right consumers at the most efficient cost.
For retailers who are solely focused on new customer acquisition, this may be an effective Google Ads strategy and can fuel retargeting efforts throughout the year.