Google Ads Bidding Strategy: Maximise Conversions Vs Target CPA
Google Ads Bidding Strategy: Maximise Conversions Vs Target CPA

Google Ads Bidding Strategy: Maximise Conversions Vs Target CPA


Scott Pittman:
Today, Head of Performance Media, Matt Yeadon, is going to be taking a deep dive into two of the most frequently used bidding strategies in Google Ads, which are Maximise Conversions and Target CPA.

We’re going to be looking at how each bidding strategy works, use cases for each, the pros, cons and ‘gotcha’s’ you should be aware of and the importance of testing them against each other where appropriate.

I guess, Matt, to start us off, when would you use Maximise Conversions? Conversely, when would you use Target CPA?

Is there any kind of specific example or case you can discuss?

Matt Yeadon:
Yeah, yeah. Yeah, definitely. I think both are vastly different in terms of the approach. There’s some situations where one’s advantageous and situations where another is the preferred option to go with.

To start with, we’ll look at maximise conversions.

The Maximise Conversions bidding strategy is ideal for accounts where you just want to get as many conversions as possible and you’re not too concerned with your CPA. It’s also ideal for accounts where you haven’t got any historical conversion data.

One advantage with Maximise Conversions is it actually can start without any conversion data in the account. And it doesn’t need a minimum per month, like some other bidding strategies.

So you can just start running with it almost immediately.

It’s ideal if you don’t really care about the CPA goal initially and if you have no conversion data in the account. It’s just going to try to get you as many conversions as possible.

Target CPA, on the other hand, that’s a great tool for optimising the account toward a CPA target. That’s useful if you’ve got historical data in the account. It will need historical data in there. It also needs a minimum number of conversions.

It does need a minimum number of conversion goals in the account to actually start working efficiently. But it’s a great bidding strategy to use if you’ve got a CPA goal in mind.

For example, “I have a $60 CPA target.”

That’s where it’s really advantageous. That’s where they really differ.

When you’re choosing which one to go with, you need to think, “Do I just want to get as many conversions as possible or do I have a target CPA in mind?

Scott Pittman:
A realistic CPA goal, as well.

Matt Yeadon:

Scott Pittman:
You can’t set a $60 CPA goal if you’re selling Ferraris, for example.

Matt Yeadon:
Yeah, exactly.

Scott Pittman:
Not going to do that.

Matt Yeadon:
It would be nice, but it’s not going to happen.

Scott Pittman:
Alright, cool. Are there any restrictions on Maximise Conversions or Target CPA? Or any throttles that people should be aware of?

Matt Yeadon:

There’s restrictions and drawbacks to each of those bidding strategies.

Maximise Conversions has two major drawbacks that can catch people off guard.

The first is that daily budgets can often exceed the daily budget that you’ve set by 200%.

Now to work towards the monthly targets, let’s say I’ve got a $3,000 budget, it’ll work towards a $3,000 budget. But if you’ve got a particular client who looks at daily spends, for example, it’s not a great strategy to implement.

That’s because your daily budget can increase by 200% and conversely, it can go the other way.

It might not get as many conversions on day two as it did on day one and under-spend as a result of it working towards a monthly goal. That’s really the first major drawback of it.

The second is it doesn’t have a CPA goal in mind, so you’re not optimising for a CPA. You’re kind of losing that control by just trying to get as many conversions through the account as possible within your daily budget or 200% higher.

That’s really the two drawbacks to Maximise Conversions.

The big one always to call out if you’re going to use it with clients, is that it can double the spend in a day. But not to panic, because it’ll balance itself out throughout the rest of the month. It can be tricky, especially if you’re changing budgets fairly often.

The Target CPA bidding strategy won’t necessarily spend 200% of your daily target, but it might under-spend in order to get that CPA goal.

If you’ve got a client who, for example, has a monthly budget and they don’t roll over, so they need to spend that marketing budget, it’s worth keeping that in mind. You might actually miss it if the account is trying to optimise towards a lower CPA and in doing so, under-spends. That’s definitely worth keeping in mind.

The second is that Target CPA requires a minimum of 15 conversions every month to actually begin working efficiently.

And I said, begin. Ideally, you want 30.

You want 30 in there every month to actually have the Target CPA bidding strategy really work at an optimal level and start driving down towards a sensible CPA target.

Another restriction that doesn’t get talked about too much, is in terms of your budgeting.

So if you change the budget after the Target CPA bidding strategy has already gone through a learning period, it will actually reset it.

And some insights from Google is it’ll reset by as much as 60%. It’ll lose 60% of its value and have to go through three to five days of learning again.

This means you actually see your CPA skyrocket before it starts to come back down. If you change the budget a couple of times a month, you might never actually get it to a point where it’s working optimally.

You need to kind of leave it and let it do its thing.

They’re kind of the restrictions or some of the pitfalls of those two bidding strategies that you’ve just got to be aware of when deciding whether to use them.

Scott Pittman:
To get the most out of these automated bidding strategies, you need to understand how machine learning works with these things, so it helps to explain and clarify that.

Question for you then:

If someone does have quite a tight CPA target but they’re getting around 10 conversions a month… would you use a CPA based strategy, with it being close to the minimum of 15? What would your advice be?

Matt Yeadon:
I would avoid Target CPA with it.

What you could look at doing is expanding the conversion goals that you’ve got set up.

Say you’re only focusing on sales qualified leads or sales leads, perhaps looking at other conversions that you could include into the mix would help to increase the data for the machine learning algorithm of Target CPA.

That would be one way to approach it, to get you more conversions to look at per month. But I would probably avoid it if you are only getting about 10 conversions a month.

I’d probably avoid it at first and see if you can generate more conversions with Maximise Conversions, and then look to migrate to a Target CPA strategy to bring the CPA cost down once conversions are being generated.

Scott Pittman:
By including more ‘conversion goals’, are we talking about going slightly further away from the actual conversion that you care most about?

Matt Yeadon:
Yeah, yeah. Exactly.

Scott Pittman:
Then assigning a dollar value to these conversions as well perhaps?

Matt Yeadon:
Yeah. Yeah.

Scott Pittman:
Good advice.

What would we consider best practice when we’re setting up these two bid strategies?

Are there differences between the best practice recommendations for each bidding strategy? What would you recommend?

Matt Yeadon:

There’s a couple of best practices. They actually overlap a lot, which is good.

It makes it pretty easy to roll Maximise Conversions to Target CPA and vice versa.

But for both, it’s worth identifying early for each campaign what the conversion goal is. By default, Google will collate all conversions that you have configured together.

With your campaign, you might have lower funnel activity that’s just focused on the sale, but upper funnel activity too, that’s tracking things like content downloads or video views for example.

If you’re running a lower funnel campaign with Maximise Conversions or Target CPA, and you haven’t defined what those goals are, it’s just going to treat all of them equally in terms of value and optimise towards generating each of them the same.

You need to set up your conversions properly and early so each conversion you have configured, has the right value and priority.

It’s really easy to do by using Conversion Action Sets.

Create a new Conversion Action Set with the goal/s that you want to track. It might be a sales lead. It might be a demo. It might be a call… whatever your lower funnel, primary conversions are.

Then just go into the campaign and go to settings and then add your Conversion Action Set as your conversion. It’ll then optimise towards that as the conversion goal.

If you don’t do that, it’ll just go for all of them equally.

This is kind of the first thing that you would do when setting up your campaigns.

Scott Pittman:
It will basically assign equal amounts to all the conversions that you set, unless you group them into specific Conversion Action Sets.

Matt Yeadon:
Yep. By default, it will just go all conversions, and will optimise to everything. You probably don’t want all your campaigns optimising to everything all the time, equally.

Scott Pittman:
No, no. This can have a huge effect on performance, just that one tip that you’ve just shared there.

Matt Yeadon:
Yeah. Yeah. It’d be a nightmare. And then for Target CPA, you want to go, like you said before, with a sensible CPA.

You don’t want to go with a $60 CPA and you’re selling a Ferrari. It’s just not going to happen.

Oftentimes, people want to optimise towards the best possible CPA they can get and assume that the Target CPA bidding strategy will just do it. Maybe the thought is that machine learning should be able to get a CPA of whatever I give?

It’s just not going to work. It just doesn’t work like that.

It’s really a gradual improvement over time. So what I would usually recommend is starting with a 5% reduction on your current CPA and then work your way down from there and see where you can get it to.

Because there will be a bottom to that. You won’t be able to get any lower than a particular CPA.

But it’s really just about gradual improvements with Target CPA. Not just going, “Let’s halve our CPA tomorrow with this Target CPA campaign”… and then the entire account falls apart, because it just can’t optimise towards that efficiently.

Scott Pittman:
Great advice. Just to finish off the call then, the last question:

Are there any pitfalls or gotchas that marketers and advertisers should be aware of with these Bid Strategies?

Matt Yeadon:
Yeah, the biggest one is that people just assume they can set and forget it. And that’s it.

It’s like, “I set a bidding strategy, let’s leave this thing to run and do its thing.”

It definitely doesn’t work like that.

Bidding strategies are a tool, they’re not a replacement for the advertiser.

You need to continue optimising your keywords, your ad copy, all of your creative needs constant work.

You also need to constantly review the bidding strategies. That means testing them against one another to see which one’s the most efficient for the account.

But you can’t just set and forget it. I think this is one of the biggest mistakes people make with bidding strategies.

Some people get a little bit lazy with them and just leave them to run and just kind of hope for the best. It just doesn’t work like that.

The second most common pitfall that I see is not setting up Conversion Action Sets which we just discussed.

I don’t know, it seems like maybe not too many people are aware of it, but it’s vitally important that you set those up in your campaigns. Otherwise, they’re not really going to have the effect that you want.

Setting up Conversion Action Sets would be the second biggest pitfall next to just assuming you can set and forget them.

Scott Pittman:
Cool. Thanks ever so much, Matt, for sharing all this great information about the Maximise Conversions and Target CPA bid strategies.

That kind of wraps up today’s call.

If anyone’s got any questions about today’s topic or any digital marketing related question for that matter, please send them in and we’re always happy to help.

If you’ve got a burning question you’d like to put to the team, feel free to send those in too and we’ll see what we can do.

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Thanks, all for watching and enjoy the rest of your day.

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