If you ask Google how to lower your cost-per-acquisition (CPA) inside Google Ads you won’t get a straight answer.
You may read through a series of articles on how to do Target CPA bidding, but that still won’t arm you with hands-on, proven strategies to lower your CPA.
Target CPA bidding will help advertisers who use Google Ads to get as many conversions as they can for their set budget, but it won’t necessarily help them save money.
To actually lower or reduce the cost it takes to acquire a new customer in Google Ads, PPC marketers need experience.
In lieu of experience, you’ll need to read on if you’re hoping to spend less on PPC customer acquisition next month.
So let’s get into it.
Google’s definition of average CPA is:
“The price advertisers pay for every new customer they acquire, which is calculated by dividing the total cost of conversions by the number of conversions. Google determines the CPA based on your quality score.”
Understanding average CPA is pretty straightforward. But again when Target CPA bidding comes into the picture things get complicated. We’ll address that in more detail in number 5 below. For now, let’s just focus on CPA as a metric and as an average.
CPA indicates the ROI of a campaign.
Lowering this metric means more return for your PPC investment.
It’s that simple, and indeed in every advertiser’s interest to get more leads for less investment.
Yet average CPAs vary drastically per industry.
For example, according to our own Google Ads (formerly AdWords) benchmark study at Acquisio (the company I work for), the average CPA for the Travel and Tourism industry is $18.01, while the average CPA for legal is $200.16.
The value of a conversion is much different within each – consider the lifetime value of a new client for a lawyer versus selling a one-time gym membership.
There is a lot of variation between industries, so keep in mind the value of you or your client’s conversion as you attempt reducing CPA.
Similarly, benchmark your current CPA with your industry to see how far off you are.
For example, if you find that you’re pretty much at the average, you may have already done all you can to lower your CPA!
Or have you?
Let’s find out.
How to Lower Your CPA
Spoiler alert: Lowering your CPA is going to mean being disciplined with your ad management or taking a risk with a new strategy or technology.
It won’t be a walk in the park, but someone has to do it!
You brave soul have made it this far and may just be the campaign manager who can lower the cost of PPC for your agency, client, brand, or business.
Here are five techniques to make you the next PPC hero.
1. Location, Location, Location
This ol’ adage applies to PPC too!
If you set your targeting too broad inside Google Ads, it’s possible you’re serving them to poorly-converting regions.
These are considered locations that have generated little to zero conversions over the last few months.
To see if you’re setting your Google Ads targeting too broad and spending too much money as a result, head to Google Analytics.
Go to Audience > Geo > Location.
Once you’re there, you’ll see the Sessions dropdown menu in the top left corner.
From the dropdown, select Conversion Rate under Goal to see which regions are driving the most conversions and which aren’t:
When PPC marketers get granular on their targeting, evening drilling down to which cities are most profitable, they can save a lot of money.
Unless you’re getting very little traffic overall (which indicates you have bigger PPC problems), this technique is a fast and efficient method to reduce your CPA and boost your campaign’s ROI.
2. Boost Quality Score with Better Ad Structure
Google determines CPA based on an advertiser’s quality score (but understanding quality score is where it can get complex).
So it would only make sense that improving your score will help reduce your CPA, right?
There is such a strong correlation between the improvement of quality score and reducing CPA that WordStream says optimizing for one is the same as the other:
Anyone who’s worked in PPC for a number of years has likely already spent a lot of time trying to improve quality score with factors like relevancy.
However, in the never-ending quest to improve quality score, campaign managers can sometimes ignore the importance of a clean ad structure.
Make sure that each ad group has a set of extremely relevant keywords. This helps boost your CTR and your subsequent quality score.
Using an ad structure known as SKAGs (single-keyword-ad-groups), where advertisers focus on only one keyword per ad group, Audi cut their CPA in half.
User beware though, only create SKAGs for your highest performing keywords, which can be determined inside Google Analytics.
For additional quality score boosters, PPC Hero recommends auditing ad structure and doing the following:
- Pause keywords that have a CTR lower than 1.5 percent or with almost no conversions.
- Make highly relevant landing pages for each ad group.
3. Use Google Ads ‘If’ Functions
The path to success in any marketing campaign is often:
Ongoing optimization is part and parcel in PPC.
Luckily, search engine marketers using Google Ads benefit from the built-in “IF functions.”
IF Functions allow marketers to set up rules for their ads to ensure they only show in desired conditions.
Consider rules like: Only show my mobile ad IF the user is using a mobile device, like shown in the examples from Google below.