If you have been running PPC campaigns on Adwords, chances are you have come across this dilemma of choosing between Target CPA and Manual CPC bidding. These are two very different bidding methods in Adwords and therefore it’s important to know how they really work before we go into judging one over the other. Here is a brief introduction to both:

Manual CPC: Manual Cost Per Click bidding method as the name suggests, allows you to set manual bids for each keyword, ad group or campaign.

Target CPA: Target Cost Per Acquisition is a flexible and automated bidding method that manages your bids automatically. It raises your bid for a particular keyword when a conversion is more likely to happen. The target CPA bidding is set at the campaign level.

The use of these bidding methods is a highly debated topic among Adwords specialists. The common argument about picking manual CPC is that it offers much greater control in setting bids whereas Target CPA saves time and effort by automating the bidding process.

However, there is not much consensus on which of these bidding methods works better and if so in what circumstances. Let’s explore both of these bidding methods and scenarios where they can work better, starting with manual CPC as this has been in existence from the beginning:

Manual CPC works best when:

  • The campaign objective is to drive maximum clicks or ad impressions
  • You want to domain search impression share on best-performing keywords
  • You have a small and limited budget
  • Your objective is to maintain a target ad position (usually top ranks)

Target CPA bidding works best when:

  • Your campaign objective is to drive conversions and have a target CPA goal
  • There are hundreds of thousands of keywords or placements across campaigns
  • You have 15 or more conversions in a campaign

Important to note here is that you should have 15 or more conversions for CPA bidding to work better. Why? Because for the automation in CPA bidding to make better bidding decisions, you need to provide it with adequate data. More efficient conversion data you provide to the system, the better the bidding decisions the system will make for your campaigns.

In essence, automated target CPA bidding is perceived as automation of bidding and time savings. However, Adwords specialists often fail to understand how the CPA bidding takes into account 100s of signals to make these bidding decisions in real-time. Neither does Adwords reveal this signals to us, nor is it practical for us to review them and make bidding decisions in real-time.

Therefore target CPA bidding could do a better job at managing bids. It can get even better as the campaigns accrue more conversion data as the campaigns scale up.

Should you start with Target CPA Bidding on New Campaigns?

Remember that for the automation to work best you need to feed it with adequate data. More the merrier. Therefore I wouldn’t start a new campaign with target CPA bidding even if one or more of those the conditions demanded it.

I would rather start with Manual CPC bidding, optimize bids and other aspects to get at least 15 conversions at a good CPA near the target and then switch over to Target CPA bidding. I would also make incremental changes (increase or reduce bids) to achieve the lowest possible CPA while keeping volumes in check.

Should You Set The Target CPA Bids Suggested By Adwords?

While changing the bidding method from Manual CPC the AdWords system is likely to provide ya recommended target CPA bid. This is based on the conversion history on your campaigns. I would recommend setting a target CPA bid around this estimate (up to 20%  lower bid or up to 20% higher bid). At times you might the recommended CPA bid way over your target and if this is the case then stay back with manual CPC bidding and optimize your campaigns further until you reach average CPA within your target range and then switch over to target CPA.

How Soon Should You Judge Whether Target CPA Is Working?

I would allow at least 30 days before judging whether target CPA bidding is working better than manual CPC. However, this doesn’t mean you shouldn’t be optimizing your target CPA bids over this period. I definitely recommended making incremental changes in the bids, not more than once in 24 hours and not exceeding 20% increase or decrease.

Does Target CPA Bidding Replace All Optimization?

Remember target CPA bidding would only manage bids. You would still need to keep up with all other best practices in campaign optimization. This includes keeping best performing keywords, analyzing search terms, adding negative keywords, optimizing text ads, etc. Target CPA can deliver better results only when better ingredients are fed in the system.

Is your PPC agency using target CPA bidding on your campaigns to its advantage? Are they following the other best practices in optimizing your campaigns? Why not take this Free PPC Audit of your campaigns and discover this yourself?

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