Announced last fall, and made official in January of this year, Google has retired Max CPA bidding, making Target CPA bidding the only available option for online advertisers.
As an advertiser, or anyone involved in digital marketing, this is significant. Perhaps you were forewarned, maybe the change happened without your knowledge and now you’re left wondering what to do.
CPA Max bidding has been retired, what does it mean and where do you go from here?
CPA, or cost-per-action is an online advertising model that allows advertisers to pay for pre-specified actions: impressions, clicks, form submissions or conversions. Previously, there were two main types supported by Google: “Max CPA Bids” and “Target CPA Bids.”
- Max CPA bidding allows advertisers to set strict spending limits, which doesn’t allow bids to go above a specific, pre-specified price cap.
- Target CPA bidding, on the other hand, is more flexible. According to Google, the practice helps advertisers see the highest level of conversions possible while achieving an average CPA target. The bottom line: it allows Google to go higher than a Max CPA bid would allow, with the target of averaging out over time.
How Does This Affect Google Advertisers?
In the past, if an advertiser entered a Max CPA bid of $10 for a particular ad group, then Google’s algorithm was constrained to always stay under that amount. It added a level of protection that made it easier for advertisers (especially new advertisers unfamiliar with their own online advertising trends) to set and stick to a budget, while adding a level of security. If a conversion rate was low, the ad spend would be reduced because the algorithm was designed to stay under the strict maximum.
On the other hand, if a Target CPA bid of $10 is set (as is currently necessary) Google’s algorithm is designed to be more flexible and is able to go after more traffic, even going above that $10 bid to gather data to inform the algorithm for future bids. It is Google’s claim that this process will enable advertisers to stay closer to their target bid, however, there is more inherent risk in this model.
How to Prepare
Get ahead of the curve and adjust your bid strategy. Below are a few ideas to get started.
Always be testing. Under the new model, advertisers can, and should test multiple bid strategies within a single campaign. This is especially critical in the beginning. Take the time to test different keywords and bids against others, to see which return optimal results within your target bid. While it will take more time, it could pay off in the long run.
The days of setting a Max CPA bid and “letting it ride” are over. While the practice is still important, careful management is now required for both the protection of the advertiser and to maximize a given campaign’s results. Target CPA bids should now be adjusted on a regular basis to ensure that Google is adjusting bids properly.
The retirement of Max CPA bidding has brought a sudden shift to the world of online advertising; as such, advertisers should take the time to adjust online campaigns and to learn more about Target CPA bidding, as it is now poised to become the new normal.