Marketers talk about the potential of Google’s preferred CPA offering, which combines machine learning and artificial intelligence to deliver meaningful insights and results. It collects as many conversions as possible against a specific goal based on cost-per-acquisition and is quickly becoming popular in marketing.
There are two main reasons for this:
- First, the target CPA uses real-time signals, such as browsing history and location, to serve ads. There are rumors that the technology takes into account weather trends, the stock market, and IoT devices.
- Second, it pushes auctions to the auction level faster than is humanly possible. Campaign managers may not bid every second of the day on every impression, but AI is making that a reality.
Google is leading the way, allowing different campaigns to use their preferred CPA bidding strategy, and brands are swallowing that. After all, advertisers are always looking for ways to optimize their campaigns and achieve one of their most important goals: achieving the result.
But marketers must first ensure that the desired CPA is a strategic match.
Limit scalability? A common misconception
Many marketers believe that scalability—that is, cost and effectiveness—is limited when using the desired CPA strategy. That’s true to some extent, but it’s not the whole story.
Google only allows your ads to appear on auctions that you can earn with a certain CPA limit. This means that other auctions that you do not participate in will necessarily be removed, limiting your related expenses. However, adjusting the CPA setting higher or lower creates volatility in spending and gives marketers a little more control.
In this case, you can use two levers: raise or lower your CPA goals and raise or lower your budget limits. The first allows you to scale your spending and the second determines whether you participate in auctions depending on how much you can spend per day.
Think about it: if your daily spending budget is too low, you will be banned from auctions for the day and will likely not be available for all the options you would otherwise qualify for. However, if your CPA setting is too low, you probably won’t be able to participate in auctions and spend your allocated budget.
Your campaign’s performance will therefore be effective and efficient if you have the optimal settings.
How do you determine if the desired CPA is right for you?
The desired CPA may produce great results for your brand, but it’s not perfect for everyone. It has a strong learning curve and can cause stress and anxiety to marketing teams due to its ever-changing nature. For example, you see 10-40% performance variations in just one day – a roller coaster that isn’t carefree.
The desired CPA is best used by brands with a clear goal in mind: performance-oriented brands that often want to optimize e-commerce sales or lead generation. Those with traceable KPIs, in particular, do this well; those who rely on offline KPIs may find it difficult to implement a targeted CPA strategy unless the KPIs are manually (and regularly) entered into the system.
Since there is so much to think about, ask yourself the following five questions before accepting the desired CPA.
1. Want to spend less time on manual bid adjustments and more time on strategy and planning?
If the answer is yes, then the desired CPA is for you. This will allow you to stop manually pulling handles on your campaigns. You no longer need to bid on keywords, time of day, devices, or audiences. This gives you more time to spend strategically with your customers and the company as a whole.
2. Do I have a static lead or sales CPA goal as my primary KPI?
If the answer is yes, then the desired CPA is for you. It’s important to have a static sales CPA or primary CPA because you need to give the system a specific goal: a single number to pursue. The desired CPA is a good choice for these strategies.
If your goal changes dynamically and constantly, the desired CPA strategies may not be the best for your needs due to the learning curve.
3. Am I currently tracking leads or sales in my Google Ads account?
If the answer is yes, then the CPA you want is possible for you. It’s vital that you keep track of leads or sales in your account as you work to bring them into your business. You cannot optimize a lead or sales bid strategy if the system is not tracking leads or sales.
4. Does my campaign flight usually take three months or more?
If the answer is yes, then the CPA you want is possible for you. It usually takes a few weeks or months to get optimal results due to the tool’s learning curve.
If you need quick wins, avoid your favorite CPA bidding strategy. It usually takes 1-3 months to make small changes to optimize a campaign, depending on the volume used. Getting the most out of your desired CPA often requires an even longer process.
5. Will I make frequent changes to my keywords, goals, and ads during the campaign?
If the answer is yes, then the desired CPA may not be the best option for you. Consider manually managing your campaigns.
One of the most challenging tips Google gives campaign managers using the desired CPA is to keep their hands free while AI and machine learning technology do the work for them. For hands-on campaign managers who want to be involved in every detail of the campaign, it can be difficult to overcome.
Many companies use the desired CPA and benefit greatly from it. But as with any digital marketing tool, you can’t wait to reap the rewards until you decide if it’s strategically right for your needs.
If applicable, the desired CPA can be the defining difference that makes you stand out in an entire media landscape.