7 Tips For Lowering Cost Per Action (CPA) Using Search Retargeting

Value, like beauty, is usually in the eye of the beholder.

In online advertising, the relative value of various campaign metrics has been subject to much debate. For brand marketers, well-designed banners shown to targeted consumers on high quality sites are perceived to have high value.

Similarly, clicks and high click through rates (CTRs) that drive targeted consumers to the advertiser’s site are often seen as very valuable to brand marketers.

However, in the world of performance display, where high return on advertising spend (ROAS) and/or return on investment (ROI) is the goal, savvy marketers don’t pay as much attention to impression or click based metrics. Instead, performance marketers tend to value the actions their campaigns drive, and the resulting cost per action (CPA).

The “actions” upon which CPAs are calculated vary widely, depending on the advertiser’s business and goals.

Performance marketers look to drive actions that include email sign-ups, travel bookings, white paper downloads, test drive appointments, and/or the sale of products and services.

Typical CPA goals we see include:

• Lead/Signup (email only): $2.00 to $5.00 CPA
• Lead/Signup (full contact information): $10.00 to $30.00 CPA
• Travel Bookings: $50.00 to $100.00 CPA
• Ecommerce Transaction: $25.00 to $300.00 CPA

In addition, retailers selling products with a broad range of values often measure ROI based on the value of the item(s) actually purchased.  In this case the sale of a high definition LCD television will be credited with a higher value, based on its sale price, than a laptop charger.

With the ever-improving capabilities and reach of search retargeting, more and more performance marketers are using search retargeting to drive improved CPA performance on their display campaigns.

If you are a performance driven marketer, here are seven tips on using search retargeting to lower your CPAs.

1.  Don’t Be Afraid To Bid High For Impressions That Are Most Likely To Convert

Campaign performance data shows that the best keywords, when targeted in the right recency windows, will drive low CPAs even if bought at higher CPM prices.

So don’t be afraid to bid at a $10.00 CPM or higher on the keywords that drive performance. This will win your campaign more volume on the best performing keywords, and if you are taking advantage of dynamic CPM pricing, you will pay a far lower CPM, typically 30% to 70% less, than your maximum allowed bid.

2.  Be Open To Keywords That Don’t Perform Well In Search Marketing

Some keywords don’t perform well in search because they are too expensive in search, too competitive, have low quality scores, or other reasons. These same keywords, when targeted on impressions with the right characteristics, may be able to deliver favorable CPAs in search retargeting.

By being open to new keywords, marketers both expand the reach of their campaigns and improve the performance. Note that poorly performing keywords can be removed from a search retargeting campaign at any time, either manually or automatically.

3.  Take Advantage Of Look-a-like Modeling

Look-a-like modeling provides insights into the search patterns of existing converters on the advertiser’s site. By using this technology, additional keywords can be discovered and tested.

For example, perhaps in-market consumers for minivans also tend to be searching for terms related to SUVs. SUV terms can be added to the campaign and tested for their ability to drive additional scale and lower CPAs.

4.  Ignore Click Through Rate (CTR) & Cost Per Click (CPC) – They Don’t Drive CPA

The reasons behind this are multiple, and could easily fill up a complete post. In the meantime, if your goal is a low CPA, don’t confuse matters by simultaneously trying to optimize to a high CTR. Likewise, don’t restrict your campaign to only the sites that can be won at very low CPM bids.

5.  Pay Attention To Recency

In search retargeting, the optimal time window between when the user performs the search and when the user is shown your ad can vary greatly by campaign and by vertical.

For example, verticals like business travel have a short consideration cycle, and the optimum recency is often measured in minutes or hours.

For verticals like automotive, there is a longer consideration cycle and a 30-day recency window may drive the best results. Each campaign has its own optimum recency window, and understanding this will drive improved CPA.

6.  Leverage Your DSP’s Auto Optimization

Based on experience, humans can set up campaigns with initial targeting parameters that will get a campaign off to a good start. However, to achieve optimum performance (whether on CTR, CPC, or CPA measured campaigns), automated optimization should be used.

This is because auto optimization can decide, in real time, which combinations of impression parameters (e.g. which search term at what recency on what site at what time of day) are the most likely to yield a conversion, and can adjust the bid price accordingly. Only by using automated multivariate optimization can the best results be achieved.

7.  Learn & Repeat

Just like many search marketers have become experts in the particular keywords and campaign settings that drive the best performance for their brands and products, marketers using search retargeting can build expertise around their products.

By digesting the data from current campaigns and using that data to drive creatives, landing pages, conversion funnels, and campaign settings for future campaigns, marketers can continuously drive their CPAs lower and achieve better return on their advertising spend.

The above suggestions should help marketers lower their CPAs within their search retargeting campaigns. And, to performance marketers, that should be a thing of beauty.