Are you looking for a bid strategy that focuses on conversions?
Well, here they are.
Probably two of the best-automated bidding strategies that focus on conversions are Target CPA and Maximize Conversions.
But today’s question is which one is better and which one can bring you a higher ROAS or ROI.
There are different contradictory opinions when it comes to comparing and evaluating their performance for ad campaigns.
That’s why we made an in-depth analysis of both of these strategies for you so that you can choose which one can be the right fit for your business and goals.
So, let’s get straight into it…
How they differ from each other?
- Target CPA or Target cost per action is a strategy that gives priority to the cost of each conversion that you set. And it won’t put your advertisement budget at too much risk.
This strategy can be used after you have generated enough data, to give you the best performance. Because Google needs to know the approximate value of each of your conversions after you have run your campaigns for some time.
- Maximize conversions, on the other hand, works best if you are not concerned too much about the prices of your conversions and want to get as many of them as possible.
In addition, it is used by new businesses that want to promote their brands as soon as possible within a short period of time.
- Advanced AI. They use advanced artificial intelligence in the bidding process. They are much more sophisticated bidding strategies, compared to the ones like Maximize clicks and Enhanced CPC.
- Ultimate goals. When you want to switch from other simpler bidding strategies later on, you may choose one of these options eventually.
- Data tracking should be enabled. In order to use them effectively, you need conversion tracking enabled in your Google ads account.
- Tracking actions. They are both great options to track your positive actions on your website like phone calls, newsletter sign-ups, form submissions, etc.
- Calculating as a group. If throughout your website, all your services or items have similar prices, they can be great options to use and would make it easier to create your profit or loss report. (That means, these options may not be good for e-commerce types of businesses)
- Probability of conversion is proportional to the conversion price. That means, the more likely is to convert a customer, the higher the price and the less likely is to convert them, the lesser the price.
- Bid strategies. You can set a standard bid strategy for a single campaign or a portfolio bid strategy across multiple campaigns.
- Require data. After about 30 conversions a month, they can work fine, but ideally, 100 would bring the best results. (Of course, if you have a higher budget, you can get that many conversions in a very short period of time. May be in 2-3 days or in a week etc.)
- Use real-time signals. They can use real-time signals by considering different factors in the bidding process.
- Only device adjustments. You can’t make non-device bid adjustments for both of them or even if you make, it will be ignored.
- Focus on conversions. They also can’t give you the same growth percentages across your campaigns as target ROAS.(So, not an option for businesses that have different products or services with huge price variations)
Their Advantages and Disadvantages
In this section, we are going to compare the Target CPA vs Maximize conversions and in which situation one can be better than the other one.
Advantages of Target CPA
- Controls CPA. The most important feature it has is you can set your maximum target CPA amount in order to control the prices and not to have an unusually high CPC or CPA. It tries to keep the actual CPA below that maximum amount, but it is not guaranteed. Although machine learning tries to keep the average price below the set target, it can sometimes fluctuate above that level.
- More predictable. With this strategy comes more predictability as well. You can tell approximately how much you can spend in a given month.
- It May not exceed your budget. It may not spend your full daily budget if you set your max. CPA amount too low. Because it may not be able to participate in enough auctions to bring you website traffic. It might be bad for some people but we added this feature to the advantages.
- Recommends the CPA. If you don’t have any idea about setting targets for your conversions, Recommended target CPA can help you with that. If you trust in Google’s AI, you can put your targets a little below the recommended price just to be on the safer side.
- Setting bid limits. You can set minimum and maximum bid limits for search auctions through portfolio bidding strategies in order to control your conversion prices. But, it is not recommended, as it can restrict the ability of the AI and your traffic volume may slow down.
Disadvantages of Target CPA
- Requires some data. You should have an adequate budget to use it at its full potential. It is advisable but not a hard rule that your total budget should be at least 20, 30, 50 times your average CPA if your goal is to have 20, 30, 50 conversions respectively.
- Lesser traffic. The volume of traffic may not be as high as maximize conversions. Because setting your CPA target may restrict that ability. (Some people put the CPA unrealistically low and they may not get clicks at all)
- Lowering the cap. Target CPA should be changed from time to time. Sometimes as machine learning acquires more data, it spends less and less money on the auctions. So, you need to follow that trend and lower the cap in the target setting process as well. And that means some manual work to be done by your side. (So, as machine learning learns more after getting data, your CPA may improve and you may reduce the CPA from time to time if you notice your results are getting better)
- Not for short time users. If you spend less, you won’t be able to test your campaigns properly and get enough data. So, mostly it is not a good option for someone who wants to use it for a couple of days with daily budgets.
Advantages of Maximize Conversions
- Learning the prices. If you are in the learning period in Google ads and you don’t know how much cost per conversion may cost you, you can run this strategy to get a general idea about the prices. Some people switch to target CPA after using maximize conversions for some time.
- Faster brand awareness. New businesses use this strategy mostly to increase their brand awareness as soon as possible. And they don’t care about the prices going up drastically from time to time and they don’t care about their ROI at the initial stage of their business. The sole purpose is to get recognized and recognized fast.
- Good for less budget. It is also good for businesses with a limited budget. As they don’t have to put limits on their CPA, it tries to get the maximum number of conversions from that limited budget.
Disadvantages of Maximize Conversions
- Little control of costs. It just tries to maximize your conversions and it doesn’t care how much high the bids can get. So, your CPC (Cost-per-click) can sometimes get unrealistically high.
- Less predictable. As you have less control, your ROI can be less predictable. Some of your daily ad spends can be much higher than the average daily expenses.
How to optimize your campaigns
With target CPA, you need to have an adequate budget depending on the volume of traffic that your website receives.
For the best results, your budget should be proportional to your average monthly volume.
Over time you need to lower your CPA to decrease the ad expenses and increase your ROI.
You can also make 3 types of device bid adjustments: Mobile, Tablet, Desktop. For example, you can set mobile devices as – 20 percent to spend 20 percent less money on mobile device users.
There are few options available for maximize conversions to optimize your campaigns, but, most of the time the machine learning improves its performance by itself.
When you want to make bid adjustments, you can only make mobile bid adjustments as -100 percent.
Target CPA and Maximize Conversions formula
The conversion formula for both of these strategies is the same.
Which one brings more conversions?
If we compare these two, Maximize conversions should bring more conversions if you have an unlimited budget.
But in terms of spending a limited budget, the target CPA may bring more and lower-priced conversions.
How to use them both to get the best results?
First, use the maximize conversions for a while to get enough data.
Then duplicate that campaign, and run the target CPA for the second campaign.
For the new one, use the conversion data from the first campaign.
If you want, you can pause the old campaign or run both campaigns at the same time to A/B test them against each other.
These strategies can be useful depending on your situation.
Whether you want more control, more predictability or you want to start marketing your brand aggressively and you are fine with losing initially, you can implement them.
Most businesses have different conversion rates, so if someone is making money by using any one of these strategies, doesn’t mean you can also.
Do your A/B test for yourself, if your data says one performs better than the other one then go for it.
At the end of the day, you are the one responsible for your expenses.
If you learn something along the way, the gain is yours.
If you have anything to add or ask let me know in the comments section below…
For any help regarding your PPC campaign management, you can reach out to us through the Contact us page.