Google Release New Target CPA Based Display Advertising Format

Stephen McCance January 17, 2019

Google Ads latest update allows advertisers the opportunity to pay for conversions rather than clicks when using Display campaigns using Target CPA. This means that you can avoid paying for clicks or impressions and only pay for each conversion, which you can set as your target Cost Per Acquisition.

Target CPA works by using historical information about your campaign and evaluating the contextual signals present at auction-time, Target CPA bidding automatically finds an optimal CPC bid for your ad each time that it’s eligible to appear.

Google Ads sets these bids to achieve an average CPA equal to your target across all campaigns using this strategy. For example, if you choose a target CPA of £10, Google Ads will automatically set your CPC bids to try to get you as many conversions at £10 on average. Google has said “if your target CPA is $10, and you drove 30 conversions over the weekend. You’ll pay exactly $300, with an actual CPA of $10. You won’t be charged for clicks or impressions.” meaning you’ll never pay above your target cost per action.

While this new bidding option means that advertisers are no longer paying for actions that aren’t always cost effective or provide value/conversions (depending on the KPI’s), there are eligibility requirements to utilise the pay for conversions option.

In order to be eligible for Display Target CPA your Google Ads account must have  more than 100 recorded conversions in the last 30 days and the time between the click and conversion has to be shorter than 7 days for at least 90% of those conversions. The target CPA must also be less than $200. Given this Target CPA bidding for display is most appropriate for high volume accounts.

It’s also possible that your Google Ads account won’t be eligible for Display CPA for “undisclosed reasons”, Google has said that in this case you’ll receive an error message that reads “Your account is ineligible to pay for conversions”, even after making the necessary eligibility requirements because “Eligibility is determined by a multitude of factors such as the API, and can change daily”.

So what are the advantages and disadvantages of Target CPA bidding on Display?

Advantages:

There would be less of a reliance on using Display targeting as a brand awareness strategy to reach new users, Display Target CPA provides the option to reach new users while driving conversions. Typically ‘top converting’ display campaigns have been limited to remarketing which only reach people who have already interacted with your website, for advertisers who want to reach new audiences while driving conversions this can be restricting. For some companies there is a great opportunity to target relevant audiences in a conversion driven way. CPA bidding automates bidding for when Google Ads determines a conversion is more likely to happen, allowing advertisers to pay more for a completed transaction than they are for an impression or click. This is a more meaningful and engaging strategy than manual CPC or other bidding strategies.

Disadvantages:

While Target CPA can ensure that you’re bidding for more relevant converting traffic it is often not able to work in the most optimal way when campaigns are restricted by budgets or when there isn’t any room to grow in impression share. The tool is often not always able to hit the target CPA which can mean that there can be periods of time without conversions/data as there is a lack of control over bids. The lack of control with bidding can also mean that the quality of traffic being targeted could be relatively low, (however certain settings/targeting can be put in place to combat this). While there are minimum requirements to qualify for CPA bidding typically bigger data volumes yield better results.

Given the above, should we be using Target CPA in Display campaigns?

This new update could see a shift in paid advertising and we could see more companies using a CPA strategy as opposed to PPC. This could allow advertisers with smaller budgets the opportunity to get their ads in front of more people with a cheaper CPC. Offering a leverage in the market while also offering companies with high volumes of data a more cost effective Display strategy.

We look forward to seeing the progressive roll out of this update for our clients.