Google recently announced that its Merchant program will be transitioning to a new commercial model, called Google Shopping. With Google Shopping, merchants set up Product Listing Ads (PLA) within AdWords in order bid on listings for products within a datafeed. Merchants have the option to use either cost-per-click (CPC) bidding or cost-per-acquisition (CPA) percentage bidding. With a CPA model, merchants pay AdWords on a commission basis and only when an AdWords click leads to a transaction on a merchant’s website.
With CPA bidding, merchants can focus on conversions by setting a cap as to how much the merchant is willing to pay. The merchant will only pay AdWords when the product is purchased by an online shopper; in addition, the merchant will pay AdWords a percentage of the product’s price. In a CPC model, the merchant pays AdWords for each click incurred, regardless of whether the online shopper made a purchase on the merchant’s website.
To implement CPA bidding, conversion tracking must be enabled for your PLA campaign. In order for the CPA model to work, it must correctly track sales and pricing for specific products targeted by your campaign. In the “Conversions” tab of AdWords, select a transaction/purchase conversion and under the Advanced options, select “Applicable for CPA% commission campaigns” and click save. Next, the conversion code must be implemented on your site.
CPA bidding is a great alternative to CPC bidding, especially for ecommerce sites that are focused on their return on advertising spend as well as for merchants who have different cost per conversion goals across a variety of product lines.
So your AdWords campaigns have grown into architectural masterpieces -structured with multiple, tightly-themed ad groups each containing precise keyword lists that have been expanded, scrubbed, and polished over time. You are rotating 3 or more versions of ad copy concurrently, removing the impression-cannibals and replacing with fresh ads — always aiming to improve upon click through rates. Now what?
To make even more of an impact, consider layering on Google’s Conversion Optimizer as part of your overall bid strategy. Conversion Optimizer is a feature provided by Google that allows you to bid using a max CPA (cost per acquisition or lead) strategy. This setting is applied at the campaign level. Google will optimize your campaign performance for the best possible ROI. CPA bids are set, but you are still charged on a per click basis. The tool calculates a CPC bid, working back from the max amount you are willing to pay for a conversion, and also using historical conversion data to determine the likelihood your ads have to convert.
Conversion Optimizer should be considered for campaigns:
Be aware that it is possible to exceed your max specified CPA. Changes to your website and ad copy should be made cautiously during the early stage use of Conversion Optimizer. These types of changes can have a huge impact on your conversion rate. If the actual conversion rate turns out to be lower than the conversion rate predicted by Conversion Optimizer, your actual CPA may exceed your maximum CPA bid.
As with any new strategy, tracking results after changing from manual bidding to Conversion Optimizer is critical. The chart below provides a snapshot comparison of campaign performance for a 10-day timeframe running Conversion Optimizer versus manual bidding.
If we were measuring success by click through rate or cost per click, our test would appear to be a failure. However, our goal with this client was to maintain a consistent lead flow at a pre-determined cost per lead. With the implementation of Conversion Optimizer, we saw just under a $6 decrease in the cost per conversion over the first 10 days of use……translating to 14 additional leads for our client.
Don’t overlook your top campaigns for bid optimization! While a manual bidding strategy is necessary for establishing strong positions and click through rates, a CPA bid strategy powered by Google’s Conversion Optimizer can be ideal for taking established campaigns to the next level. Although campaigns may continue to convert at a respectable rate, you may be missing out on volume by not leveraging this free tool.