As search networks evolve and AI is increasingly responsible for audience selection and ad content, setting efficiency targets is one of our primary tools for driving performance changes. But how do KPIs actually respond to target updates? We assessed data from a variety of Google campaigns utilizing target CPA bid strategy to investigate the impact of target changes. We were surprised to find that the best use cases for target updates are more limited than we’ve previously thought, and have some recommendations for other tools that may be better suited to achieve your performance goals.
When are target changes effective?
If you’re trying to achieve a different return from your ad spend. We found that cost per conversion moved in the same direction as the target CPA about 80% of the time, proving that decreasing your target CPA is an effective way to decrease cost per lead. Keep in mind that this works both ways, so if you increase a target expect efficiency to worsen as the campaign optimizes for the new target. We often see hyper-efficient campaigns go through a period of inefficiency before achieving an average closer to the target.
What if you’re happy with the efficiency your campaigns are achieving, but trying to drive more volume?
Logically, allowing a campaign to spend more for every lead (by setting a higher CPA target) should unlock more of the available audience – but in practice, this isn’t always the case. After assessing conversion volume before and after target changes, we found that target CPA increases only resulted in higher conversion volume 60% of the time. While pricing is a part of the auction, it seems to be outweighed by other factors like changes in quality score and competition. When assessing impression share metrics compared to target changes, there was no observable relationship. Search impression share increased in only 51% of campaigns after a target CPA increase, indicating that changes to efficiency targets are not a reliable way to reach a larger audience.
Then how can we maximize volume?
Expansion into new audiences is the obvious answer, but there are ways to drive more volume from existing audiences which may be a priority if budget is limited or when trying to optimize a specific audience segment. Improving quality score (comprised of ad relevance, expected click through rate, and landing page experience) not only improves auction performance, but will also likely increase yield throughout the funnel by improving the customer experience. We assessed conversion volume trends based on click through rate and found a much stronger correlation than with target. When click through rate improved by at least 5%, conversion volume increased about 75% of the time – even if combined with a target decrease.
Before making your next target update, carefully consider your goal. If improving efficiency is what you’re after, making your target more conservative is likely the right approach. If you’re trying to grow volume, look throughout the funnel for where the campaign is limited. A more aggressive target could increase cost without the desired increase in volume, where a more effective approach could be improving ads and landing pages. At the very least you can expect to improve the yield from your current audience without increasing investment, and there’s potential to unlock even more volume through achieving a higher quality score.
Comments