Every business owner wants to save money and increase their profits, but this is more challenging than it sounds, especially when advertising costs and CPAs seem to grow without reason sporadically. One of the significant issues businesses run into is needing a lower cost-per-acquisition (CPA). However, when CPA is too high, it can cripple a company’s marketing budget and limit its ability to reach more potential customers. In this article, we’ll discuss why your CPA might be too high and how you can lower it so your business can grow.
Your Keywords Need Optimizing
Your keywords might need optimizing if your CPA is too high. Often advertisers need help with which areas of keyword optimization they should focus on. Issues like using the wrong keywords, bidding too high on keywords, bidding on too many match types of the same keywords, and not vetting the search terms list for the wrong words are widespread reasons keyword optimization is desperately needed.
An example of how your campaign can wander astray by not checking your search terms is a story I often reference when explaining the importance of keyword optimization to others. I ran B2B and B2C ads for a staffing agency in New England. The agency had many locations along the East Coast, so there were many campaigns and even MORE keywords to maintain. As a result, we had a hefty list of keywords we researched and felt confident would trigger relevant impressions.
When we checked the search terms, however, we were astonished that most of them needed to be tweaked to be more appropriate to our campaign objective. For example, “Jobs for 12-year-olds near me” and “babysitting gigs” were the predominant terms used. Worse than these were search terms related to a particular adult industry that involved hustling (use your imagination). These terms were wasting ad dollars and needed to be excluded immediately.
Your Bidding Strategy is Wrong
Your CPA could be too high because your bidding strategy may need to be corrected. It’s easy to assume that if your advertising objective is to gain more leads, your campaign objective should be Target CPA. But this isn’t the case for some marketing budgets.
Here’s why.
Target CPA is “a Smart Bidding strategy that sets bids for you to get as many conversions (customer actions) as possible. When you create the Target CPA (target cost-per-action) bid strategy, you set an average cost you’d like to pay for each conversion. When a customer does a Google search that fits your product or service, Google Ads uses your Target CPA to set a bid based on the auction’s likelihood to convert.” (1)
In other words, according to Smart Bidding, Google will predict which viewers may be more likely to convert. This is an average cost, so that some bids may be much higher than others. If Target CPA is your campaign objective, but you have a low budget, you could be running through your budget quicker than expected.
If your advertising budget is low, consider changing your bid strategy to Maximize Conversions or even Maximize Clicks. This way, you’ll have an even-keel delivery that doesn’t run through your budget too fast.
Your Audiences Need Optimizing
There are several reasons why your CPA might be too high. You may need to target a better audience. I’ve collaborated with other advertisers who believe that if your keywords and bid strategy are on-point, nothing should go wrong with your ads.
This couldn’t be more off-base.
Sure, keywords and quality scores matter when it comes to the delivery of your ads. And even better, ad automation makes managing your ad campaigns easier. However, it’s imperative not to use advertising automation as a crutch. Ads should never (and I mean NEVER) be a “set it and forget it” deal.
Ad automation features like Audience Expansion (2) claim to find new, relevant audiences that you otherwise wouldn’t have seen. However, just like all AI, this feature could cause your ads to run askew if left alone too long. If left unchecked, your ads could be delivered to gaming websites where your audience isn’t even likely to pay attention to your ad.
If you find that Audience Expansion is driving your ads in the wrong direction, it’s time to consider better audience targeting. Plan to create affinity, custom, or in-market audiences for your ads. Additionally, plan to tweak your demographics to better suit your target market.
Whatever the reason for your high CPA, it definitely warrants a deep dive on your marketing team’s part. Allowing your CPAs to remain high will only hurt your budget in the long run.
If you still need help with your advertising challenges, consider hiring E.D. & Co. for a quick help desk session. It’s easy and collaborative and only takes a couple of hours! Contact me today! 706-609-0205
