Brad Geddes / PPC Geek
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Author of Advanced Google AdWords.
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Brad Geddes's Theories on Marketing 4 Life Lessons to Help Make CPA Bidding Work for...

4 Life Lessons to Help Make CPA Bidding Work for You

I’m a huge fan of Google’s CPA bidding system. Setting bids is necessary; but it leads to only short term progress. Your bidding work is only useful until the data changes and you have to set bids again.

Now, the statement ‘your changes are only good until the data changes again’ can be applied to ads, landing pages, placements, and any data point within your account.

The issue that needs to be examined is frequency of data changes. Rarely do ads need to be changed every few days. An ad or landing page can perform for long periods of time. However, bids rarely do. Rarely do you have an optimal bid set for a keyword for a month straight. So, when you consider areas of your account where you can make long term gains, they are not in bidding. Bidding is a short term gain, but a necessary action.

Therefore, when CPA bidding works well for an account, the PPC manager can spend more time focusing on these long term gains and less time on bidding.

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However, I often find a simple mistake with CPA bidding, or even with 3rd party bid systems. Once CPA bidding (or a 3rd party system) has been enabled, the PPC manager sits back and thinks their work is done.

For the purposes of this article, we will leave out all of the testing you should be doing regardless of your bidding methodology, and focus on making CPA bidding work for you.

I find that when CPA bidding fails, it does so for one of three reasons:

  1. The campaign’s conversion data is sporadic by keywords and ads. An example is when you have thousands of keywords; but only 20% of them receive a conversion in the past 30 days; however, all contribute to the total conversion amounts over the course of a year so you can’t really delete any to increase the conversions between fewer data points.
  2. ‘Best Practices’ of account management are ignored because the bidding is being taken care of by Google
  3. It just doesn’t work for totally unknown reasons. I do see this happen on occasion where everything is setup and managed perfectly, but for unknown reasons, the CPA bidding just can’t seem to get the bids correct

Let’s look at a few scenarios where CPA bidding failed, but with some minor changes, the bid system ultimately succeeded.

Data Problems

The first example is one that amazed me. I was doing an audit on an account that was using CPA bidding. The company had failed to put the conversion tracking on their mobile device (so it was not Google’s fault conversions weren’t being tracked) and the campaign was set to all devices. The desktop performance was high enough to ensure that CPA bidding had enough conversion data to keep running.

After using CPA bidding for 3 moths, 25% of all traffic was still being sent to mobile devices.

CPA bidding does take into devices into account when setting bids. However, it rarely ‘gives up’ on a device, instead, it keeps trying to find a bid that will work. By just adding the conversion code to the mobile site, CPA bidding because much more effective.

The Lesson: Make sure all your tracking is correct.

Using Call Extensions to Create Goals

The second example is an ecommerce site. They were B2B ecommerce, so they did use the phone extension as calls often converted into sales; however, they were all sales on the phone that were not put back into analytics to see the actual revenue per conversion.

When this company upgraded to an enhanced campaign, they liked the fact that they could count calls as conversions and thus used the ‘report phone call conversions’ option in their account.

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They continued to receive phone calls, but their CPAs climbed considerably for all ecommerce goals and were well above their target CPAs. While CPA bidding didn’t technically fail, as it was getting calls, the ecommerce manager was quite unhappy as the overall site ecommerce was declining and there wasn’t data to show them exactly what data points were generating the calls.

They disabled the option to report calls as goals. After the disabling, they still received calls (as they did before going to enhanced campaigns); however, their CPAs went back to their target goals, and all the conversions were actual ecommerce checkouts

The Lesson: If you are going to add additional conversions for CPA bidding, make sure you really want the optimizer working off of those goals.

Keyword Expansion

The next lesson comes from a company who used CPA bidding for months, and they were very much enjoying the bid system. They had put so much faith in the system that they just kept adding keywords and thought Google would figure it all out.

Every month their CPAs went up; but not by enough that anyone cared enough to investigate. They just assumed it was bid pressure and kept adding more keywords.

After several months of expansion; it was time to give their quarterly report to the VP of Marketing. The CPA trend worried her, so she asked for a larger time frame for the CPA trend. Once she saw the CPA climbing for several months, she asked for a 3rd party investigation.

The answer was quite simple. They were adding keywords, but they were not paying attention to the search queries of those keywords. Just by adding a few hundred negative keywords, the CPAs quickly returned to an acceptable amount.

 The Lesson: You must still follow best practices of account organization, match type selection, query analysis, and adding negative keywords even when using CPA bidding.

Ad Copy Testing

The next example comes from a company who is great at landing page testing, but decided it was time to start doing more ad tests. So, they created a program for testing their ads, wrote lots of new ads and put them live into their account.

Their CTRs almost doubled. Their conversion rates almost dropped in half and their CPAs rose more than 30%.

The problem? They were using Google’s default ad serving option: optimize for clicks.

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If you are going to test ads in CPA bidding campaigns, you have two options:

  • Control everything: Use rotate indefinitely, watch the data, pick winners, delete losers, repeat.
  • Know you’ll forget to end tests: In this case, if your are going to create multiple ads and then forget about them, use ‘Optimize for Conversions’ for your ad testing. With this method, Google will pick the ad with the best conversion rate and show it the most often.

The Lesson: CPA bidding does not serve ads – it sets bids. If you are going to test ads, and you should, make sure you are using the correct ad rotation settings.

Conclusion

I find that much more often than not, CPA bidding is highly effective. There are times it does fail, but that now seems to be the exception, even for low conversion accounts.

Now, CPA bidding is great when you have a static CPA target for all keywords in each ad group. For many ecommerce sites, there isn’t a target CPA; but a target ROAS. In that case, CPA bidding is rarely the best bid method to use.

However, no matter how good CPA bidding is for you; if you don’t continue to follow best practices for optimizing your account, CPA bidding will often become ineffective.

Just because you have an automatic bidding system, either Google’s CPA bidding or a 3rd party bid management system, doesn’t mean you can stop working on your account. Those systems change bids based upon the system inputs. If you give them bad  data, they will make bad decisions.

Using automated bid management is great, it gives you back the time you would have spent setting bids so you can make sure you are using all of the best practices in your account. However, you can’t abandoned your account when you use such a system – you must still continue to follow best practices.

No Comments

  1. Sam Mazaheri
    December 19, 2013 at 3:30 pm · Reply

    Great post Brad! I’d switch all of my campaigns to CPA bidding if I could.

  2. Alan Mitchell
    December 29, 2013 at 5:46 pm · Reply

    Hi Brad,

    I’ve tested CPA bidding on several accounts and even with a large amount of conversion data, I generally find that CPA bidding performs worse than manual CPC bidding. My reasoning is that since bids are changed based on historical performance, raising the bid of one (high performing) keyword, ad group, or campaign may raise it’s ad rank and take impressions away from another (more relevant and qualified) keyword, ad group, or campaign. It’s something I wrote about here: http://www.searchenginepeople.com/blog/the-google-adwords-trap-chances-are-youre-paying-too-much-for-your-google-adwords-clicks.html and was also briefly discussed here: http://searchengineland.com/adwords-bid-management-and-account-structure-mistakes-to-avoid-180516. What are your thoughts? I find it very challenging to create a campaign and ad group structure with funneling negative keywords which is completely immune to this keyword bidding cannibalization and therefore tend to avoid CPA bidding.

    Cheers,
    Alan

    • brad
      January 2, 2014 at 9:09 am · Reply

      Hi Alan,

      First off, for long tail items or display network targeting; I’ve found that CPA bidding is great and I rarely veer from it if possible.

      Now, what I do find is that CPA bidding is not aggressive enough in changing bids by device or locations. So, there are many times that even if I’m using CPA bidding, I will break down my campaign by regions (unfortunately, I can’t do this by devices any longer) so that Google is forced to bid within some location constraints.

      I have found on occasion that I can beat CPA bidding with manual bidding; however, this is all about the time investment versus the reward. For instance, if I’m manually setting bids each day/week then I might not have enough time to test ads, create new keywords, etc (items that lead to long term results); so I’m OK with a small hit on the CPA if my testing makes the overall account better and was something I couldn’t do if I was manually setting bids.

      Now, I have also found times that I can’t beat CPA bidding with manual bidding – and that’s often when the data is sparse. I also find times (like new products, seasonality effects, etc) that CPA bidding fails most of the time versus CPC bidding as it doesn’t compare data year over year to understand the changing bid environment.

      So, overall, I’m a huge fan of CPA bidding; but there are times that manual is better – just be aware of your time resource as to the overall results.

      Changing bids is a transient increase. It’s only good until you change bids again. Testing ads and landing pages lead to long term results – so the benefits are larger than changing bids.

      Hope that gives you something to think about,
      brad

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