The squeeze
I was emailing a client recently, trying to explain why their campaign had been struggling.
After a price rise on the product we’re advertising and a consequent drop in CVR, we hadn’t managed to pull back into positive territory. Either volume was low with an okay CPA, or volume was okay with a high CPA.
Moving the CPA target in either direction just swapped one problem for the other.
In the email I wrote: “We can hike target CPA up for volume, but not while retaining a decent CPA. Likewise, a lower target suppresses volume too much. This all pivots around that lower baseline conversion rate.”
And that word – pivots – got me thinking. It might be more literally true than I’d realised.
The fulcrum
Think of a seesaw. Volume sits at one end, efficiency at the other. Your target CPA is the force you apply – raise it and you push the efficiency side down while volume lifts; lower it and volume drops while efficiency rises. So far, so obvious.
What’s less obvious is what determines how much room the seesaw has to move. That’s the fulcrum – and the fulcrum is your conversion rate.
A high CVR is like a tall fulcrum. The bar sits high off the ground, and a given push on the target produces a meaningful swing in both directions. You have room to operate. You can find a setting that delivers acceptable volume at acceptable efficiency, because every target adjustment gives you a useful change in outcome.
A low CVR is like a stubby fulcrum. The bar barely clears the ground. Push the target as hard as you like – the bar can barely move. You’re stuck in a narrow range where nothing you do with the target produces a useful result.
The seesaw is real
This may be more than a nice analogy.
On target CPA, the bid is expected conversion rate x CPA target. (And if it’s not quite that simple, those are at least the two, key, top-level factors weighing in on it, with ‘expected conversion rate’, of course, having a wealth of sub-factors feeding into it.)
Google presented this equation years ago… I’ve dug it up from a slide deck made in 2018. The slide was making a different point – it was about the advantages of query-time bidding – but the equation has an interesting implication for the seesaw.
CVR isn’t just a variable used to differentiate bids across queries, it’s the multiplier that determines how much range your target CPA has to take a useful effect.
Take two campaigns, both moving their target from £50 to £100:
• At 2% CVR, the bid moves (to simplify) from £1.00 to £2.00. That’s £1 of additional competitive range.
• At 10% CVR, the bid moves from £5.00 to £10.00. That’s £5 of additional range.
Same input, same doubling of the target – but the high-CVR campaign has opened up genuinely new competitive territory, while the low-CVR campaign has barely shifted its position in the auction.
Relative vs absolute effect
Granted, both campaigns doubled their bid. Proportionally, the competitive shift is identical. And that might be the end of the story if we were just competing against ourselves. But we’re not; we’re competing against everyone in the auction.
The advertiser with a strong landing page and 10% CVR is bidding £5 on the same query where you’re bidding £1. You double your target, you get to £2. You’ve opened the door to doubling your CPA and you’re still not competitive for the best traffic.
Low CVR doesn’t just mean you need more clicks to get a conversion. It means your target CPA becomes a blunt instrument. The multiplier is too small to translate target changes into meaningful changes in auction participation. There’s a tier of competition you can’t buy your way into, because no commercially viable target will generate a bid high enough to get you there.
What to do about it
If you’re stuck in the squeeze – if every target adjustment just trades one bad outcome for another – the target isn’t the problem. The fulcrum is.
That means improving your conversion rate: landing page quality, offer strength, audience precision. The factors that move the multiplier, not the factors that get multiplied.
A better CVR doesn’t just get you more conversions per click. It gives you more leverage. It allows your target CPA adjustments to open up competitive territory that no amount of target inflation could otherwise reach.
