#3 Unintuitive Things about Target CPA

Unintuitive Thing #1

For most Google Ads users, most of the time, the aim is to generate as many conversions as you can, at the lowest CPA you can find.

Why – in that case – would you want to set a particular CPA for the smart bidding algorithm to aim for?

If the target isn’t achievable, what good is it?

If on the other hand it’s possible to bring those conversions in for less, you surely don’t want to put any artificial limits on your campaigns’ cost effectiveness?

Why not just use Maximise Conversions and… maximise conversions?

As an experienced PPCer said to me recently…

I’ve had the same thoughts myself… It’s not intuitive.

But the shift for me came when I started thinking about the CPA target not as a fixed bid, but as a flexible tool to nudge the algorithm’s priorities in a certain direction on the ‘volume<->economy continuum’.

First, the reason why you might set a target at anything higher than your genuine ideal level (I mean, a £0.01 CPA would be nice, right?) is that the algorithm has a protective function. When it can’t reach your ultra-low CPA target, it will protect your spend by throttling itself.

The trouble is… how much will it throttle itself? At what point? How much time and how much spend will it tolerate, when it can’t bring CPAs down to your target level?

We can see that tCPA campaigns are quite willing to keep running with over-target CPAs for quite a while…

When they do, we need to know how to deal with them…

Unintuitive Thing #2

Let’s say your target CPA is £15, and – after a few weeks – your campaign has settled into a fairly consistent CPA of around £28, and is spending your full daily budget.

While you might intuitively think that the algorithm has found a CPA floor at £28, and respond by moving your target up to that level, the better move in that situation is to lower your target further.

By lowering your target – and increasing the gap between the actual CPA and the targeted level – you put more pressure on the algorithm to take seriously the fact that it is not being cost effective enough, and to start being more cautious, bidding lower, and being more selective about which auctions it contends aggressively.

When you find that CPA is below your target and yet the campaign is failing to make use of all available impression share, raise the target (again increasing the gap).

This will nudge the algorithm into the expansive approach you’re after, dragging the actual CPA up and – more importantly – pursuing more conversions, more freely.

It’s fairly unintuitive that when the strategy is already failing to meet your CPA targets, the best action is to increase the gap, making it even harder for it to do so… But the wider the gap, the more urgently the algorithm tries to close it.

 Those redoubled efforts to move towards the target should then produce more of the behaviour you want to see.

Unintuitive Thing #3

It’s also hard to get to grips with the (admittedly few) controls at your disposal with smart bidding in general, because of the significant gap between the input and the output in the system.

Relative to manual bidding, there’s a chasm in between – in this case – reducing a CPA from £15 to £10, and seeing how the campaign really performs with that £10 target.

Between those start and end points, there’s usually a significant time delay; there can be an initial period (of uncertain duration) with unpredictable and misleading performance changes, and there’s a whole lot of invisible algorithmic involvement weighing your target into 100 decisions per auction, in ultimately unknown ways.

This can make it difficult to tune into the cause and effect of target changes.

As Daniel Kahneman pointed out*, it’s easier to learn how to steer a car than to pilot a ship, because the turn of a steering wheel gives immediate feedback, while turning a ship’s wheel starts a lengthy process before the outcome can be fully understood.

Managing Target CPA (or Target ROAS) is more like piloting the ship.

But remembering these unintuitive things should help a little with the navigation.

If you want to get deeper into using Smart bidding effectively, there’s an in depth course module on exactly that. Have a look at Google Ads Level Up.

*I’d like to add the reference for this but haven’t been able to track it down yet. If you happen to know it, drop me a line, I’d appreciate it!

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