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Tips to lower your AdWords cost-per-conversion (CPA)

30 July 2013 BY

We all want to pay as little as we possibly can for a conversion and we don’t always reach our KPI’s at first go, and therefore have to take action where needed. I like to look at AdWords as a toolbox very much like the one where you keep your screwdrivers, hammer, and other utilities useful for home improvement.

AdWords is full of great tools which, unfortunately, seem to get past many users. In this article you’ll find easy-to-use actionable tips that you can use in your account that can help you improve your results on Google, increase your %ROAS and impress your boss and/or client.

1. Decrease your Max. CPCs

When you increase the maximum CPC setting for a given keyword, you are likely to see an increase in your CPCs and your CPAs. The same goes for when you decrease your maximum CPCs; this is a great place to start!

Keep in mind that decreasing your CPC will affect your ad rank and therefore likely your position on the SERPs and the amount of auctions you’re eligible to partake in. Before you make drastic changes to your keyword bids create an AdWords Experiment (ACE) to evaluate the effect of your changes before you make a final decision.

Here’s a screenshot of an experiment where I’m testing a 10% bid decrease as well as the ratio of auctions I’d like to test the new bids in.

adwords-experiments-lower-CPA-PPC

2. Don‘t forget your search query report (SQR)

I’ve said it once and I’ll say it again; your search query report is one of the most powerful tools you can use for two reasons

A) To identify new opportunities that can have a positive impact on your business. You’ll find this report in the Keywords tab under Details > Search Terms > All. Search query reports give a great insight into the terms that are returning visits and revenue via your ad.

In the example below I’ve identified two search queries that I had previously missed when setting this account up. They’ve returned some clicks and conversions and are well below this client’s CPA goal so I decided to add them to my keyword list. Building your lists like this will slowly but surely have a significant impact on your accounts performance.

search-query-report-lower-CPA-PPC

B) Search query reports don’t only give you insights into terms that return positive revenue but also those that are e.g. irrelevant or too broad and return negative revenue that you can exclude.

Last month I excluded 486 search queries in one of my accounts amounting to 11.03% of the total spend during that period. Theoretically, if I had aggregated the same amount of conversions and spent less, my average CPA that month would have been around 10% lower, or the keywords that are returning good results would have had more space to “blossom”.

I go through search query reports quite regularly and so should you, growing your negative keyword lists should be a part of your regular optimization efforts – seriously.

Sidenote: I do recommend that you label all newly implemented keywords to easily monitor them. I label these keywords NIK either for one month or 100 – 1000 impressions (depending on the nature of the sector).

3. Optimize your ad copy

Some of your ads produce more conversions and clicks for a lower cost than others. I sometimes talk about the holy trinity of search where correlation between keywords, ad copy and landing pages are a big influence in your success online – it seems obvious but I still see many promise “apples” in their ads and, hopefully unintentionally, direct their traffic to a landing page that’s selling oranges.

Your customers experience your ads differently which echoes in your results – this is why you should always be testing. I like to create 4 – 5 different ad copy for every ad group and run them alongside each other until I’ve identified a winner. After a winner has emerged I’ll pause the underperformers and start optimizing that message.

In the example below we’re looking at 30 days’ worth of data (I changed the ad copy). Notice that the underperformer has a 260% higher CPA yet it has a slightly higher CTR and slightly lower CPC. It’s likely that users who clicked on the underperformer didn’t relate to the content on my landing page as well as those who clicked on the winning ad so in this case I’d pause the loser and keep optimizing the winner.

optimize-ad-copy-lower-CPA-PPC

 

keyword-bubble-lower-CPA-PPC

Sidenote: One of the factors that influence your keywords quality score is the ad copy you associate with the keywords in the corresponding ad groups.

[Keyword A] might have a higher quality score when associated to AD COPY 1 than AD COPY 2. This is why you might see some ads with a lower average cost per click.

 

4. Check your campaign settings

There are campaign level settings that you can, and should, use to reduce your cost per conversion. Here are three different settings you can play around with

A) Ad rotation offers four different settings, one of them is “Optimise for conversions: show ads expected to provide more conversions”. It’s designed to help you when there is more than one ad in your ad group; if you’re only running one ad in your ad group it won’t have any effect.

This is a neat setting to use when you’re running hundreds of different ads in various ad groups and campaigns and will give the ad expected to return more conversions greater room to shine.

ad-rotation-settings-lower-CPA-PPC

B) The Keyword matching option allows Google to include misspellings, plurals and more when matching search queries to your exact and phrase match keywords, your ad might e.g. get an impression for the search query ‘vikings’ when you’re bidding on the keyword [viking].

This option is by default enabled when you create a campaign so I recommend that you look at your search query report and filter out exact and phrase match (close variant) search terms to see what results these terms are producing. In my experience this option has often helped to identify new opportunities that are not far off in terms of meeting CPA goals.

In some cases I’ve seen close variants that are far from relevant or too broad for my accounts. These terms can take a piece of your marketing budget that could have otherwise been spent on your winning keywords – if you haven’t opted out of this option I recommend that you keep a close eye on these terms and if you see that they’re only wasting your budget then opt out!

adwords-filters-lower-CPA-PPC

C) You can make bid changes based on hours of the day and days of the week – this setting is called Ad schedule. In many cases your customers convert more frequently at certain hours of the day. You can see when your conversions are costly, when your customers are likelier to convert etc.

If you don’t know where to pull out this data go to the dimensions tab, click on the grey view button and select Time > Hour of day / Day of the week and voila. Here you’ll see how your campaign/s performed from 00:00 to 23:59, Monday to Sunday.

Below is a screenshot that visualises my progress for every hour of the day, notice the difference in cost-per-conversion and conversion rate between 00.00 – 07:59 and 08:00 – 23:59. 

custom-ad-scheduling-lower-CPA-PPC

The avg CPA of the first 8 hours of the day is €39.93 which is 42% more than the avg CPA for the remainder of the day; in this case I might want to create a customized ad schedule, like the one on the right, and start by bidding 30% lower for the clicks during the first 8 hours of the day, let the results role in and go from there.

bid-adjustments-lower-CPA-PPC

5. Isolate the losers // Damage Control

Many businesses are limited by budget which is why you might want to isolate the losers from the winners and assign a special budget for them. This way you’ll be able to allocate more budget to keywords that are hitting goals and less towards keyword that aren’t. You can create a semi “clinic” for the keywords that aren’t hitting them where you can work on improving their results or simply pause them.

Below I’ve moved keywords that meet this accounts CPA goals to a campaign that’s called “Flights // (A) – Below CPA”, I’ve allocated €100/day to that campaign and €40/day to a campaign called “Flights // (A) – Above CPA” which is where I’m working on the losers.

winners-vs-losers-lower-CPA-PPC

6. Pause ’em…

Sometimes it’s best to pause underperformers while you figure out what you want to do with them. I recommend that you look at the Search Funnels metrics to make sure that these keywords don’t contribute anything to your search marketing efforts before making this decision.

Conclusion

There you have it! 6 tips you can use to reduce your cost per conversion; play around with your campaign settings, see when your customers are likelier to convert, isolate the losers from the winners, pause underperformers and more – all actionable tips you can use within your account before planning changes to your landing pages.

Keep in mind that changes such as these don’t always have an immediate effect. Similar to increasing your search click through rate, reducing CPA requires disciplined optimization.

I really hope these tips will help you to make your account better. Got any tips on how to reduce CPA? We’d love to hear it!

AUTHORED BY:
h

Haukur Jarl Kristjánsson, a.k.a “the Hawk” (@haukurjarl), is a well-rounded PPC strategist, SEM consultant and trainer based in Reykjavik, Iceland.
  • Emma North

    Nice post Haukur, sound advice. I wrote the other day about diagnosing and resolving low CTR (http://www.koozai.com/blog/pay-per-click-ppc/low-click-through-rate/), something which would also help reduce CTA. A higher CTR = lower CPC = lower CPA. Sometimes small tweaks to increase CTR can make a real difference in the long run. Thanks for sharing :-)

    • Haukur

      Hi Emma,

      You’re spot on! small tweaks here and there do wonders for any account.

      Glad you liked it and thanks for reading!

  • Emma North

    Nice post Haukur, sound advice. I wrote the other day about diagnosing and resolving low CTR (http://www.koozai.com/blog/pay-per-click-ppc/low-click-through-rate/), something which would also help reduce CTA. A higher CTR = lower CPC = lower CPA. Sometimes small tweaks to increase CTR can make a real difference in the long run. Thanks for sharing :-)

    • Haukur

      Hi Emma,

      You’re spot on! small tweaks here and there do wonders for any account.

      Glad you liked it and thanks for reading!

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  • Anna Lewis

    Hi Haukur, some nice ideas – what do you think of Google’s conversion Optimiser tool? I’m using it to reach a target CPA on a few campaigns at the moment and will roll it out on a few more shortly but I’m always wary of not having control over things.

    • Haukur

      Hi Anna! Sorry for the slow reply, I’ve been on holiday.

      My view on Google’s Conversion Optimizer is the same as for any automated service; If you’re going to trust a system to do the work for you be sure that it has enough data to work with.

      Automated systems aren’t perfect so I suggest you monitor these campaigns very closely.

      Thanks for reading!
      Haukur

  • Anna Lewis

    Hi Haukur, some nice ideas – what do you think of Google’s conversion Optimiser tool? I’m using it to reach a target CPA on a few campaigns at the moment and will roll it out on a few more shortly but I’m always wary of not having control over things.

    • Haukur

      Hi Anna! Sorry for the slow reply, I’ve been on holiday.

      My view on Google’s Conversion Optimizer is the same as for any automated service; If you’re going to trust a system to do the work for you be sure that it has enough data to work with.

      Automated systems aren’t perfect so I suggest you monitor these campaigns very closely.

      Thanks for reading!
      Haukur

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