What Is Target CPA and How Does It Work?

What Is Target CPA?

Machine learning permeates our life in many areas. And online marketing is no exception. Target CPA (cost per acquisition), is an AI-based strategy that generates as many conversions as possible at a user-specified price.

The algorithm picks out the most relevant display options based on numerous indicators: user location, display time, OS, browser, device type, behavioral data, etc. By analyzing more data than humanly possible the AI manages to secure more conversions with fewer expenses.

Is Target CPA For Me?

The main advantage of this strategy is time-saving and efficiency. There is no need to manually select bids based on your own analytics. An AI will always optimize cost-per-action more efficiently than any human ever could, since it can analyze a much larger volume of data.

Target CPA Best Practice

The Target CPA strategy is best used when you can't manually increase your ROI. Also if you need to optimize a profitable, successful campaign. Best to employ this strategy after getting at least 30 conversions within a month — this way the AI algorithm will have enough data to analyze. The other launch strategy is getting conversions through maximum bids and then switching the campaign to Target CPA in order to optimize prices.

How To Set A CPA Target

Here are some tips for setting up an ad campaign with this strategy:

• don’t set conversion prices that are too low — even though the AI works with the pre-set price, they won’t be able to secure conversions with pre-set bids that are lower than the average auction ones;
• aim your campaign at a wide audience — if your targeting is too narrow, the algorithm won’t have enough data to work with. Better to focus on a wider audience and just let the AI do its thing;
• allocate a large ad budget — best to set aside a budget 10 times the conversion cost. With a small budget the algorithm won’t have enough data to analyze and, therefore, to successfully optimize the campaign;
• set aside time for the algorithm to learn and don’t worry about its correctness — after the campaign launches, some indicators may decrease in the short-term. Keep in mind that the training period for the algorithm is at least 3 weeks, it’s important to wait for the result and not make any adjustments to the campaign;
• don’t worry about the CTR dropping — this is normal for this strategy, don’t deem the campaign ineffective because of that. The algorithm often deliberately disables auctions in which the conversion intent is initially low;

Target CPA Results

When launching test campaigns, the Nordicclick marketing agency showed positive results in comparison. Below is the data for an ad campaign with manual settings and a test campaign with a Target CPA strategy.

There was a decrease in ad campaign expenses, an 85% increase of the conversion rate, and a 38% increase in the number of conversions.

The rest of the changes can be seen in the summary below.

A Final Word On Smart Bidding

Target CPA strategy is great for novice users, no need to set up a bunch of indicators or risk draining your budget for nothing. You get charged only for conversions. If there are none, you don’t lose a dime.

For experienced users, Target CPA is an excuse to test and learn how to work with new automated tools, and optimize existing campaigns.

Global trends point to the fact that increasingly more analytical and setting tasks will be carried out with the help of AI.

Big data analytics is a routine job that no human can do better than an AI.

This will have a positive impact on campaign performance, and marketers will have more time for more creative and strategic tasks.

This article was written in partnership with Galaksion.