That’s right. I get 167% ROI using Target CPA bid strategy in Google Ads. Sometimes it's even better, and sometimes it's in negative.
But it works!
This ROI was calculated over one month’s spend in Google Ads so some days it was less and others more. The average is 167% ROI over one month’s spend.
This particular campaign is in the Auto industry niche. The customer has a Mobile Tyre Fitting Van and people call him if they have a problem with their car tyres i.e., a puncture or a tyre burst.
What is Target CPA Bidding?
Target CPA is an automated bidding strategy under Tools -> Budgets and bidding -> Bid Strategies.
CPA means Cost per acquisition/action, and to calculate CPA, Google simply divides the Total ad spend by the number of conversions.
Once you set your target CPA for x number of campaigns, Google automatically adjusts the cost per click for each keyword or product to align with your goal.
Why do I like this strategy?
I love this strategy because it's easy to manage and returns are really good if you know what you're doing.
How to set up Target CPA strategy
If you like to watch the video here, you can skip below and just watch the video tutorial.
Let's get started.
Here are some important points if you wish to get a good return in this strategy.
Choose your keywords wisely
Keywords are always an important part of any SEO or Google Ads campaign so you need to choose these wisely when setting up a Target CPA strategy.
For example, we are setting up a campaign for a “Mobile Tyre Fitter” so we need to find keywords that are closely related to mobile tyre fitting and avoid using general keywords related to “tyre fitters”.
We only want people who can not go to a tyre shop and are stuck in an emergency or at home with a broken tyre or a puncture.
If we target everyone looking to buy a tyre, it will generalize the campaign, ending up with Target CPA bidding for expensive keywords.
We don’t want that!
Here is a screenshot of what keywords I targeted for this campaign
When adding keywords, don’t forget to check at the end of the day and add words in your negative keyword list to avoid clicks you don’t want.
For instance, I am adding all other brand names, or tyres in the category we don’t have in the negative list.
Here is the screenshot of my negative list.
If you check above, we get a lot of queries related to “tractor tyres” that we don’t do, so I have put “agricultural” in the negative list.
We don’t do alignment either, so I have put “alignment” in the negative list.
I have added most terms as a broad match so Google knows that I don’t want to bid for anything related to these terms.
So the point is your Target CPA will only work if you create a set of keywords and negative list according to how you want Target CPA to bid.
If you do this step properly, you will get a very profitable campaign.
Setup conversions
Setting up conversions on your website is the second most important step in Target CPA bidding strategy.
In my case it is a “call ad” so my conversion will be counted if someone clicks on the number to call.
Here is the screenshot.
I have set up two conversions.
First one is if a customer calls directly from the ad and doesn’t go to the website.
Second one is to set up on the website, as there are call buttons on the website, so if a customer clicks on the website number, it will be counted as a conversion.
Setting up conversions is important because Target CPA uses this data to bid for keywords. We give a target CPA, let's say £30, to the strategy.
It will bid for keywords provided and look to get a conversion within the £30 budget. It can go up and down depending on how new or old the campaigns are.
£30 is only a number we provide; Google will try to be as close as possible.
If you check my results below, my target CPA is £45, but I was getting £30.87 per acquisition.
This is only possible if you have done the first two steps properly (keywords and setting up conversions).
Target CPA settings
When you set up Target CPA strategy, you only need to set Name, Target CPA, Shared budget (optional), Minimum and Maximum bid (optional), and add campaigns to this strategy.
If you set up a shared budget, Google will use this budget and divide it equally among all the campaigns in this strategy.
My client told me that if he can get a sale at £40, he is happy with that. So what I would do is set a similar CPA and a high shared budget for all the campaigns.
Why do I do this?
Because what I have noticed in my experience is that if you set up a small budget for the campaigns, Google will only bid for cheap clicks and those clicks won’t convert very well.
If the budget is high, Google will bid for expensive converting keywords resulting in better sales. The whole budget is never used because Google tries to achieve the Target CPA.
It is a win situation anyway. If the customer is achieving the Target CPA, he wouldn’t mind more sales at that CPA, even if the full budget is used, as he is achieving good ROI.
However, this is not always the case.
Sometimes, Google will not give you any sales even after spending over 3x the Target CPA. Because there are many other factors than bidding in this system, it can go out of control.
Results depend on targeted keywords, conversion setup, how the market is going on that particular day, how others are bidding, etc.
There are so many factors, so if you are not achieving results after spending 4x your Target CPA, I would advise to look at your keywords and try some other type of keywords or changing your Target CPA.
You can increase your Target CPA initially, and monitor results, and then adjust.
Here is the screenshot of the everyday ad spend and earning from the client. Since the job is cash in hand, we cannot set up conversion value in Google Ads, we have to manage it in the sheet.
You can see that the customer is not making a profit every day, but at the end of the month, he made a net profit of £3669.35.
This is how it goes with Google Ads.
Conclusion
Target CPA works very well for most of my customers. You don’t have to spend a lot of time managing keyword bids manually.
You just need to provide good data to Google and he will do the rest!
