Ada Parker Marketers can still increase acquisition efficiency despite recent Google Ads changes.
Is it your mandate to reduce Google Ads spending and lower CPA to a more manageable level?
Here are the most recent CPA optimization best practices and tips to reduce good Ads spending. Let’s get started!
Table of Contents
What Is CPA?
According to Google’s explanation, “Average cost per action (CPA) is calculated by dividing the total cost of conversions by the total number of conversions.”
“Different people will have different definitions of conversion.
Leads are typically regarded as a conversion in the business-to-business sector.
Typically, the conversion for e-commerce clients is a sales transaction.
Engaged users might be the conversion that is used to convert an upper-funnel branding initiative into a CPA.
The link that ties everything above together is prospective customers doing something worthwhile.
How To Reduce Google Ads Spend?
1. Stop Low Performing Campaigns
You might want to just temporarily pause underperforming campaigns, depending on how much you want to cut back on ad spending. Campaigns using display and video are excellent for branding and consideration (aside from remarketing), but they rarely result in significant conversion rates. Till you get your numbers under control, think about turning these off, at least temporarily. Similarly, you might want to put on hold any search campaigns with CPAs that are noticeably higher for the time being.
2. Reduce Keyword Bids
Generally speaking, if you do this on your own, you can lower your CPA to any desired level. Your current average ad positions and where you are in relation to your new target ad spend will determine how much you lower your bids. If your campaign is “limited by budget,” you can probably lower your bids significantly before it has an impact on your ad spend.
Think about adjusting the global bid by, say, -25% everywhere. Please take note that lowering bids by 25% does not automatically mean that you will lower your ad spend or CPA by 25%. For more significant changes, you should also hand-pick keywords with high spending and high CPA. Protecting high-performing keywords, those that produce conversions at significantly lower CPAs than the average is equally crucial. After the change, you might want to move some keywords back up to the bottom of page one if a significant number of them fall below page-1 bids.
3. Optimize Device Bid Adjustments
We need to address this if, for example, mobile devices account for 80% of your clicks but convert at a rate that is 1.5 times higher than the average CPA. Set a -33% mobile bid adjustment in this precise situation. For the remaining devices, don’t forget to apply offsetting bid adjustments. This will align your CPA with the industry average and direct more of your advertising budget toward computer and tablet platforms that perform better and have higher conversion rates.
4. Adjust Demographics Targeting
Bring up your demographics reports, then show your CPA and conversion metrics. You should either exclude those demographic segments or, at the very least, set a negative bid adjustment for them if you are paying an excessive CPA for some ages, genders, or income levels. The best-performing demographic groups should also have positive bid adjustments, just like with devices.
5. Pause Low Performing Keywords
Look for keywords with at least 5 conversions and a CPA that is two times or higher than your average. You could cut bids in half and let them go, but we’re taking drastic measures. All of these can be put on hold for the time being. It’s also time to stop promoting any keywords that are costing you more than four times as much as your average keyword, even if they have only occasionally converted.
In the example given below, two keywords are responsible for only 8% of conversions while accounting for nearly 44% of ad spend. It would be wise to pause the highlighted words.
6. Replace Broad Match Keywords
This process might take a while. View the search terms report for each of your high traffic broad match keywords after selecting each one individually. You should think about substituting the keyword with a Broad Match Modified or Phrase Match variation if there are lots of low-quality search terms.
We will address this in the following step if you are only seeing a small number of poor-quality search queries.
7. Add Negative Keywords
Pull up the search terms report and select all of your keywords. We’re going to sort in a few different ways to reduce wasted advertising dollars:
Sort By Clicks (most To Least)
Find the search terms that have produced many clicks but few/no conversions by scrolling through your results. Include these as exact match off-keywords.
Sort By Cpa (Highest To Lowest)
Locate the search terms with at least three conversions that are significantly higher than your desired CPA, such as 3–4X, and add them as negative exact match keywords.
Sort By Ctr (Lowest To Highest) And Filter For Impressions > 100
Exact match negatives should be added for low CTR search terms. These are lowering your average CTR for related keywords, increasing your average CPCs, and lowering your ad positions.
8. Turn Off Partner Network Targeting
Check the performance of your Network (with search partner) segment and evaluate CPA for each campaign. You should disable Search Partners’ targeting where performance is noticeably lagging in order to save money. Since Partner Networks typically account for 10% of all clicks, the change won’t likely be particularly significant.
We can see from this example that Search Partners’ CPA is more than twice as high. Curiously, a CPA of $24 is still substantially below the industry average for this account and our revised target of $50. Therefore, it makes sense to keep this campaign’s search partner targeting. An important lesson from this is that when comparing KPIs within a single campaign or ad group, you must take the account as a whole into account.
9. Adjusting Location Targeting
If you target locally, you might want to make additional adjustments in addition to the obvious one of optimizing bid adjustments by location. Check your geographic report to see if visitors from farther away are increasing your CPA. If this is the case, you have three options: stop targeting those areas, reduce your radius, or (preferred) build concentric radiuses with decreasing bids as you move away from the center.
10. Adjust Ad Schedules
This one requires a lot of industry-specific optimization. In this instance, I’m not referring to adjusting bids for various times based on CPA performance; you should already be doing that. Your campaigns should only be allowed to run during specific hours, as I suggest. That frequently entails stopping campaigns on weekends and possibly after hours for B2Bs. That means that for consumer businesses, campaigns should only be run during business hours.
How To Lower CPA In Google Ads?
In Google Ads, there are a number of ways to lower CPA, such as:
- Review the accounting structure.
- Budget rebalancing for a campaign.
- Alignment of the bid and the campaign.
- Optimizing at the keyword level.
- Changes to audience/device bids.
- Data integration.
- Automated bid techniques
- Use the Recommendations section of Google Ads.
- Change the conversion settings.
- Keyword expansion.
- Ad personalization.
- Individualized user experience
- Following a click.
The Bottom Line
Continuous efficiency gains and lower CPAs will unquestionably result from giving the aforementioned four focus areas priority as you optimize.
The list isn’t exhaustive, but it does show what shrewd marketers consider when deciding how to best enhance their Google and Microsoft Ads accounts.
Read More: What’s A Characteristic Of Responsive Display Ads?
