Target CPA vs. ECPC Maximize Clicks
Google provides a number of different bid strategies tailored to different types of campaigns. Depending on whether you want clicks, impressions or conversions there is a bid strategy for your campaign. Of interest here are the smart bidding strategies that automate the bidding process. Smart bidding strategies use machine learning to optimize for conversions or conversion value in each and every auction. This real time bidding factors in many auction-time signals such as device, location, time of day, language, and operating system to capture the unique context of every search. The four smart bidding strategies are:
- Target CPA (cost per acquisition) - optimizes for conversions while targeting a specific price per acquisition.
- Target ROAS (return on ad spend): Optimizes for conversion value. Use Target ROAS to increase conversion value while targeting a specific return on ad spend.
- Maximize Conversions: If you want to max out your conversions (say in a call only campaign) and spend your entire budget you can use Maximize Conversions.
- Enhanced Cost-Per-Click (ECPC): ECPC automatically adjust bids to maximize conversions (based in part of users who have converted before). Can be used with manual CPC bidding or maximize clicks.
In this case, we tested Target CPA versus Maximize Clicks with ECPC on a cab company call only campaign. The goal was to improve the conversion rate while lowering the cost per conversion (phone call).
Target CPA Bid Strategy
The campaign in question was the Ann Arbor (Michigan) Call Only campaign for a local green cab company (MiGreenCars.com). Over time we've found that the Ann Arbor area is more competitive than the Detroit area for cab and taxi keywords and typically has higher cost per click and cost per conversion. To combat this we initially tried a Target CPA experiment that showed good results (See Figure 1).
Figure 1: Target CPA Experiment Results
Based on previous maximize click data, Google recommended a target CPA of $1.34 (see Figure 2). This gave good results by improving conversion rates by more than 15 percentage points and slighly lowering the cost per conversion. But we wanted to see if we could reduce the cost of a call below $1.00 for this competitive market.
Figure 2: Setting Target CPA in Adwords
ECPC with Maximize Clicks
One option is to set a maximum cost per click you are willing to pay. The problem with this approach is that you can be limited by lowering your max cpc, and your ad position and conversion rates can suffer. A hybrid approach is to lower the max cpc (we went from $1.34 to $1.00) and turn on ECPC (see Figure 3). ECPC will adjust the CPC around the max cpc point depending on the likelihood of a conversion. For higher likelihood users Google increases the bids with no limit. For lower likelihood users Google decreases the bids. In theory the net effect should be higher conversions at a lower cost. We set out to test this theory by running an experiment which we call "low-ball ECPC."
Figure 3: Maximize Clicks $1 ECPC
Results of ECPC Max Clicks vs. Target CPA Experiment
After running the experiment for about a month the results look promising (see Figure 4). Overall the new ECPC bid strategy lowered the cost per conversion by 35.5%, and boosted the conversion rate by more than 11 points (see Table 1). The CPC dropped by less than a point but is still over 10%. As expected the average ad position dropped slightly from 1.6 to 1.8, with lower bids but still above 2.0 which is generally where you want to be on call only mobile devices.
Figure 4: Results of ECPC $1 Max Clicks vs. Target CPA Experiment
Table 1: ECPC $1 Max Clicks vs. Target CPA $1.34 Experiment
|Metric||Target CPA $1.34||ECPC $1 Max Clicks||Difference|
|Connversion Rate||83.33%||94.67%||+11.34 percentage points|
The low-ball ECPC strategy worked. We successfully lowered the cost per conversion below $1.00 per call while improving the conversion rate by more than 11 percentage points.
You can lower the cost per conversion and improve conversion rates with smart bidding strategies. In this case study we tested a low-ball ECPC Max Clicks strategy against Target CPA. The low-ball strategy reduced the cost per conversion by more than 35%.
- Michigan Green Cars was the subject of this case study. Thanks again to the folks at MI Green Cars for permission to use their PPC campaign as an example.
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