CPA Bidding in Google AdWords allows you to set a CPA bid, and then Google will do all the bidding for you. When it works, its fantastic, as you don’t have to spend all day trying to set bids inside the account. Instead, you can focus you time on more permanent improvements, such as testing your ads and landing pages.
When CPA bidding first rolled out in 2007, you needed at least 300 conversions in the past month for it to work. Over the years, Google has improved the algorithms to the point in 2010 that you only needed 15 conversions in a campaign over the past 30 days to enable this setting.
However, I always found that no matter what Google’s minimum conversions, the tool failed more often that not if you didn’t have roughly 150-200% of the minimums needed – until very recently. Now, I’m seeing a different story with CPA bidding.
Small Account CPA Bidding Case Study
I was working on an account where most campaigns were averaging 15-20 conversions per month. The data was sporadic and inconsistent. One month, certain words would get a conversion and the next month, a completely different set of words would get a conversion.
There were very few words that would receive a conversion every single month; and the words that did have these consistent conversions were often higher than the target CPA for the account.
The target CPA was $65 per conversions. Only one campaign had exceeded this CPA. Every single other campaign was significantly higher than this goal. To turn this account around, I went through several steps:
Step 1: Build A New ‘Optimized’ Campaign
The first step is to take all the data and create a very granular, organized campaign that used the best features of the data from the past several years. This was to be a benchmark campaign of what was possible.
Due to some very high bids that were risky to try in a new campaign and items working ‘well enough’ in the other campaigns, some of the other campaigns were tweaked a little to show the difference between well-organized and the typical campaigns; but were left to continue running to mitigate any transition risk.
This is why many columns talk about organization, and they are right to do so; just going through this step increased the total conversions significantly (50 to 112).
Month 1 Data:
Tweaking some settings, such as adding negative keywords, removing poor keywords, finishing some ad tests, moving some budgets around, etc., resulted in the account more than doubling it’s conversions, and lowering the CPAs.
However, the ‘new campaign’ with the ‘proper’ organization immediately hit the CPA goals while bringing in an additional 18 conversions, which is a large increase since the account only had 50 conversions in the previous month.
Step 2: CPA Bidding
In the second month, some minor tweaks were made; but, the biggest change was turning on CPA bidding for a few campaigns.
Month 2 Data:
Once CPA bidding was enabled, the conversion rates went up by 0.7%, which is a nice, but not a huge increase. The CTR dropped a touch, which is not uncommon to see.
However, the total conversions increased by 40 with a $10 reduction in CPA. That’s what CPA bidding can often do for smaller accounts. No longer are the conversions hovering at the 15-20 range where you might not be able to use CPA bidding, but they have increased enough where Google does have more data to work with.
Step 3: Ad Rotate: Optimize For Conversions
I’m a huge fan of ad testing, and usually use one of the ‘rotate’ features for testing purposes. However, this was a small account, and I wanted to see how good the ‘optimize for conversions’ would be in a small account.
In addition, I had consistently heard from people who had tried these small CPA tests before that it was often working for a few weeks; but then, the volume dropped so much they had to stop using the biding option. In order to keep building the conversion numbers so that wouldn’t be a trap, I then enabled ‘Optimize for Conversions’ in the ad settings:
Now beyond that, other things were being done inside the campaigns, such as adding negatives, removing some very very poor performing words, testing extensions, and so forth; but, the largest change was the ad serving.
The ‘optimize for conversion’ setting had an unexpected result – it not only increased the conversion rates, it increased the CTR in a few campaigns:
Month 3 Data:
The ‘well organized’ campaign amazingly went from a 5.64% CTR to a 10% CTR with optimize for conversions. Other campaigns increased in CTRs as well; however, not to quite the same levels. This seems so strange to me that I’m still testing this setting in some other campaigns to see if this is somehow a common side effect.
As CPA bidding is suppose to just set bids on keywords, and ‘optimize for conversions’ is suppose to just serve ads; it seems very odd to see a CTR difference of this magnitude.
The overall conversion rates went from 3.24% to 5.09%, with the ‘well organized campaign’ going from a 2.97% to a 4.99% conversion rate. That’s a very nice increase since it only takes 30 seconds to change the ad rotation setting from one option to another one.
The other dramatic change was the PLA campaign went from a 5.77% conversion rate to a 11.30% conversion rate. That’s an amazing difference in a PLA campaign where very little work is being done on the management side.
This is the overall result of one good campaign (the other campaigns weren’t touched outside of some basic items such as adding negative keywords and manipulating the budgets) and conversion optimizer during a 90 day period:
- Conversion rates: increase from 1.94% to 5.09%
- CPA: decreased from $101 to $44
- CTR: increase from 3.21% to 3.46%
- Total budget: increased $4,600
- Total conversions: increased from 50 to 216 per month
Most of these campaigns are also limited by budget, so the next step is to open up the budgets and see with just budget manipulation if the total conversions can more than double again (at the same CPA). After that’s done, it’ll be time to reorganize some of the older campaigns, test serving the ads on more hours of the day, and of course, do some landing page testing.
I’ve now tested CPA bidding in a few smaller accounts, and I’m seeing similar results. Even with 15-20 conversions, conversion optimizer is working more often than not; and, if it works early on, then the total number of conversions often goes up causing it to be even better in later months as it has more data in which to work.
CPA bidding being successful for small accounts is a huge change from last year when it failed more often than not. No longer do the advanced tools such as CPA bidding have to be relegated to just large accounts (where it almost always consistently performs well) – small accounts can try some of these more advanced tools as well.
The total amount of time put into this account’s rise to success is roughly 20 hours over 90 days. Even if no other changes were made in the account to help conversions, the account is looking to spend about double in 2013 than in 2012, but with over quadruple the conversions. That’s a pretty good 20 hours of work; and, its mostly due to proper organization, an execution and testing strategy, and Google’s CPA Bidding option.
If you have struggling small accounts, test CPA bidding and ‘optimize for conversions’ ad serving, the results might surprise you.
Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.