Bidding is More than Just How You Pay

December 12th, 2012 by Justin Miller

CPA or CPC? Which is best for your Pay per Click (PPC) Advertising Campaigns? To answer that, first let’s look at how these two strategies differ from each other.

CPA – Cost per Acquisition (Conversions): You set a target CPA and Google will automatically adjust your CPC bid to keep you relatively close to your target. From my experience, Google has been getting CPA just under the target CPA.

CPC – Cost per Click: This is the more common bidding strategy and allows you to manually or automatically (enhanced) set maximum CPC bids per keyword.

The Case for CPA

Obviously, the first requirement for using CPA is the necessity of Conversion tracking (which should be a priority anyway). But assuming you are tracking Conversions, is CPA your best option? From personal experience, a good campaign for CPA bidding is one that is well established and in a stable market. While implementing CPA strategic bidding, we witnessed a decrease in CPA, which increased profit margins.

The Turning Point

However, once there were changes within the market, such as new advertisers and increased competitors’ bids, the overall performance of campaigns using CPA dropped. Despite using some automatic tools to maintain average position, Google’s CPA bidding style was not able to remain competitive. The Campaign began decreasing in Clicks and Conversions. As a result of the decrease in Conversions, the CPA strategy automatically lowered the max CPC causing the ads positioning to drop, which further impacted the Conversion Rate. The CPA bidding strategy began a steep drop in performance.

The Case for CPC

Once the bidding strategy was changed back to manual CPC, the Campaign regained its positioning in the market, and the Clicks and Conversions increased back to normal levels as well. Although this required an increase in CPC, we were able to maintain the overall CPA at a very close level to the original target CPA.

Conclusions

The end result was no relative change to the calculated CPA, but an increase in overall Conversions. The conclusion is this: Google’s automatic CPA bidding strategy is great to use once your PPC campaign is up and running, but be sure to keep a close eye on it. Increased competition in your market could send your PPC spiraling downward quickly.

Have you had more luck with CPA or CPC bidding strategies? Leave us a comment and let us know!

Justin Miller is the Search Manager for DaBrian Marketing. He does everything from research, account creation, campaign management, and reporting to improve clients’ Pay per Click (PPC) advertising and Search Engine Optimization (SEO). With separate accreditation in Google Analytics, Google AdWords, and Bing Ads, Justin has been helping companies increase awareness, website traffic, as well as conversions (sales, sign-up, registrations, etc.)

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