Google’s Pay for Conversions Option: What You Need to Know
You’ve probably heard about Target CPA bidding (aka “tCPA”), the Smart Bidding bid strategy type in Google Ads. tCPA utilizes machine learning to process historical info and contextual signals to optimize bids towards sales. This means your bids are tailored to each and every search with the goal of getting your campaign as many conversions as possible based on your desired target cost-per-acquisition. This saves a ton of time manually going to each account, figuring out the next steps, and applying them across each and every campaign.
When tCPA was first introduced you paid for clicks on your ads while Google tried to gain conversions at your target CPA. Now, Google is shaking things up with a new option that allows you to pay for conversions rather than clicks.
To get started with tCPA for Conversions you can create a new campaign, or update an existing Smart or Standard display campaign within Settings > Bidding > Target CPA > Pay for > Conversions.
You will only be billed for conversions received at the target CPA that you set. Meaning if you’re tCPA is $30 and you get 3 conversions in a month, you are only charged a total of $90 (or $30 per conversion). You are not charged for clicks or impressions, even if they lead to a conversion. This can be useful for businesses with properly defined conversion actions that contribute towards the client’s ultimate goal.
This feature currently only applies to Smart Display and standard display campaigns that use Target CPA bidding. Instead of limiting clicks, you are only allowed to limit the tCPA and the UI will ask you for confirmation if your limit exceeds $200.
Here at Four15 Digital, we’ve been running campaigns with the tCPA bid strategy type since their inception and our results are generally positive. Machine learning is wonderful but that doesn’t mean it’s worry-free. For example, Google does a better job at optimizing towards the target CPA when it is relatively close to the actual CPA.If we start off with a target that’s vastly different from actual CPA it has a much harder time actually achieving our goal. To remedy this we incrementally scale our target CPA, usually every 2 weeks depending on the rate of actual CPA change, until our goal CPA is reached. For example, for a campaign with an actual CPA of $300 and goal CPA of $100, we would set an initial tCPA goal of $250, observe a drop in actual CPA to $250, then set a new tCPA goal of $200 and repeat until actual CPA reaches the goal CPA. We also like to implement bid limits to prevent very high CPC/CPA amounts. This ensures that we don’t dramatically cut conversion volume for the sake of CPA – which is exactly what would happen if we simply set our tCPA goal at $100 initially.
If you are interested here are some things to keep in mind when adopting the Pay for Conversions bid strategy:
- Pay for Conversions is incompatible with shared budgets.
- Cannot be used towards offline conversion types such as “Import from clicks” and “Store visits”.
- Cannot be used unless the CID has a conversion delay (time lag between click and conversion) of less than 7 days.
- Account must have more than 100 conversions in the last 30 days.
- 90% of conversions must occur within less than 7 days after someone clicks your ad.
- Google recommends setting your budget much higher than the target CPA. This may compound spend in Smart Display campaigns which are notorious for requiring massage budgets. You can set a target CPA less than $200 USD and values above that will activate a warning message in the UI.
- Budgeting rules are more flexible since conversions varies more than clicks and daily spend may exceed daily budget by more than 2 times. Good thing is that within a calendar month, you won’t spend more than your highest daily budget times the average days in a month (30.4).
- Unlike bid adjustments for manual CPC, bid adjustments for Target CPA modify the target CPA rather than the bids themselves.
As digital advertisers we should strive to stay up to date with the newest features and see if we can benefit from the back bending labor executed by machine learning and tCPA bidding for conversions is no exception. If you have a client that has well-defined conversion actions as their goals you should definitely give tCPA conversion bidding a try with the guidelines I’ve outlined above.