Cost-per-acquisition (CPA) bidding
Cost-per-acquisition (CPA) bidding is a bidding method that lets you tell AdWords the amount you're willing to pay for a conversion. It's part of the AdWords Conversion Optimizer feature, which predicts which clicks are likely to lead to a conversion and automatically sets your bid to try to get you as many conversions as possible, at the cost-per-acquisition bid you specified. CPA bidding is great because it can bid differently from auction to auction to get you more customers who are likely to take action on your website.
Oftentimes, your goal is to get a customer to click your ad and take an action on your website, whether it’s to make a purchase or sign up for a newsletter. These actions are called conversions (sometimes also referred to as acquisitions). Unlike cost-per-click bidding, CPA bidding focuses on maximizing conversions, rather than clicks. You still pay per click, but AdWords will automatically set your bids to help you get more conversions, saving you effort and time.
CPA bid types
- A target CPA bid is the average amount you'd like to pay for a conversion. Some bids will be above this target and some will be below it, but altogether, the cost per conversion should average to the Target CPA you set.
- A maximum CPA bid (max. CPA bid) is the most you're willing to pay for each conversion, such as a purchase or sign-up. When you use Conversion Optimizer, most of your bids will be below whatever maximum you set.
We recommend using target CPA since it's easier to track your average conversion costs. Also, people using this option tend to see more conversions.
Save time and effort on managing your bids by trying Target CPA bidding as a flexible bid strategy. You’ll be able to apply Target CPA bid optimization more strategically to entire campaigns or specific ad groups of your choice. How to use flexible bid strategies.
When you set up Conversion Optimizer, we provide a recommended bid, which is calculated to help ensure a smooth transition to your new bidding mode. The recommended bid is based on your historical performance, so it’s best to start with the recommended bid, then observe your performance and adjust as necessary. If you set your max. or target CPA bid to the recommended amount, you should see more conversions without much change to your existing average CPA. If you set your bid below the recommended amount, you're likely to pay less for each acquisition, but you'll likely also get less traffic on your ad and fewer conversions.
After you've used Conversion Optimizer for awhile, if your average cost is within an acceptable range, you can raise your max. CPA bid to get more conversions. If your cost is higher than you'd like, you can lower your bid, which is likely to lower your average CPA and the number of conversions.
The final amount you're charged
Your actual CPA depends on factors outside Google's control such as changes to your website and ads, or external factors such as increased competition. So it's possible that your actual CPA may exceed the max. CPA or target CPA bid you specify. Conversion Optimizer uses historical conversion data to predict the likelihood your ads will convert. If your actual conversion rate turns out to be lower than the predicted conversion rate, your actual CPA may exceed your max. CPA or target CPA bid. But because the system is designed to adjust over the long term, the likelihood of your actual CPA exceeding your bid decreases the longer you use CPA bidding.
How to edit your CPA bid
You provide your first CPA bid when you turn on Conversion Optimizer for your campaign. Once you’ve set it up, you can update your CPA bid at anytime by following these steps:
- Sign in to your AdWords account at https://adwords.google.com.
- Click the Campaigns tab.
- Click the Ad groups tab.
- Find the ad group that contains the max. CPA or target CPA bid you want to edit. As you place your cursor over the rows, a pencil icon appears. Click the Max. or Target CPA bid to edit it.
- Enter the amount you'd like to use for your bid.
- Select Save to finish.
You can also change your max. CPA or target CPA bid for multiple ad groups at the same time. Follow these instructions:
- On the "Ad groups" tab, select the checkbox next to the "Ad group" column. This should select all the checkboxes for every ad group.
- Click the Edit menu.
- Select Change bids.
- Select the Max. CPA or Target CPA field from the menu and enter the bid amount you'd like to use for all the selected ad groups.
- Click Make changes to save.