A tighter Target CPA can buy fewer conversions

Every Target CPA campaign runs on a number someone typed, and most arguments about whether the campaign is working are really arguments about that number. Google describes Target CPA bidding as an automated bid strategy that sets bids for you to get as many conversions or customer actions as possible. It says the strategy automatically finds an optimal bid for your ad each time it's eligible to appear, by using historical information about your campaign and evaluating the contextual signals present at auction time, and it names device, browser, location, time of day and remarketing list among the real-time signals.

The target is an average, not a ceiling on each conversion. Google says some conversions may cost more than your target and some may cost less, but altogether Google Ads will try to keep your cost per conversion equal to the Target CPA that you set. It adds that your actual CPA depends on factors outside Google's control, like changes to your website or ads or increased competition in ad auctions, and that your actual conversion rate can be lower or higher than the predicted conversion rate.

Google says the Target CPA that you set may influence the number of conversions that you get, and that setting a target that's too low, for example, may cause you to forgo clicks that could result in conversions, resulting in fewer total conversions.

That is the sentence on the page most worth remembering. Our reading of it, not Google's wording: the target decides which auctions a campaign is willing to compete in, not only what it pays in them. Cutting the target to bring CPA down can bring volume down with it, and a campaign with a target well below what it has been achieving can end up spending much less than its budget without getting any cheaper.

If your campaign has historical conversion data, Google Ads will recommend a Target CPA, which Google describes as the average CPA from the last 30 days, adjusted for any conversion delays. You can choose whether to use it or set your own, and instead of changing the campaign immediately, Google offers Save as experiment, which runs your new settings against your original campaign.

Our practice is to start at what the campaign has recently achieved, not at the number the business would like, and to move from there in steps: 10 to 20 per cent per change, never more than 30, at least two weeks apart. Those are our working rules, not Google's, and they exist so that each change can be read before the next one lands.

The delay adjustment matters more than it looks. Google's explanations describe conversion delay as how recent conversions that haven't been reported yet can cause a drop in conversions. It follows, as arithmetic rather than anything Google states, that a last-30-days CPA read without that adjustment can be higher than it will be once late conversions arrive, and a target set from it starts looser than the campaign has really been achieving.

Not the number you typed. Google says that when evaluating bid strategy performance you should compare your CPA achieved with the strategy's average target CPA, the traffic-weighted average CPA that your bid strategy optimised for, because it more accurately reflects what Smart Bidding is optimising towards. Both sit in the bid strategy report, where the average Target CPA appears beside Actual CPA, which Google says represents the actual CPA that this strategy was able to achieve. Google recommends measuring performance over periods that have at least 30 conversions.

Our working bands, which are thresholds we use and not a measured benchmark: an achieved CPA within about 15 per cent of the average target is a target doing its job. A target more than 25 to 30 per cent tighter than what the campaign achieves is, in our reading, more likely to be throttling delivery than buying efficiency, and it is the first thing we look at when volume falls.

When a number moves sharply, Google's explanations can say why before anyone guesses. In the bid strategy report for Target CPA, Google says you can view explanations for the Cost, Conversions and Actual CPA values. Its bidding explanations include bid strategy target changes: how changes to an ad group, campaign or portfolio level target may have affected your performance. You won't have explanations if your date range contains today's date.

Most bid adjustments do not steer it. Google says that if you're using Smart Bidding strategies, including Target CPA, you don't need to make manual bid adjustments, and that if you make a manual bid adjustment to your automated Smart Bidding strategy, it won't be supported. Device adjustments work differently under Target CPA: Google says they modify the value of your CPA target rather than the bids themselves, so a +40% mobile adjustment on a £10 target makes the mobile target £14.

Bid limits are narrower than they look. Google says setting them for Target CPA isn't recommended, because it can restrict Google Ads' automatic optimisation of your bid. They are only available for portfolio, not standard, Target CPA bid strategies, and if you do set them, they'll be used in Search Network auctions only.

And the budget needs room. Google recommends reviewing your budget settings to make sure that you feel comfortable spending up to two times your average daily budget, while not exceeding the monthly charging limit.

This is our own practice, not Google's. Before we change a Target CPA, we answer three questions in writing. What was the average target over the window, and how far is the achieved CPA from it. Does the window hold at least 30 conversions, with late conversions accounted for. And did the explanations or the change history show something else moving at the same time: a budget, a conversion setting, a bid limit.

If the target is not the thing that moved, changing it is a guess. If it is, change it in one step, write the date down, and leave it alone long enough to read.