AdWords Conversion Optimizer Changes: No More Max CPA

Google has decided to remove Max CPA as a bidding option from their Conversion Optimizer tool in AdWords:

In the coming months, we’ll be removing the ability to set a maximum cost-per-acquisition (max CPA) bid in a campaign using Conversion Optimizer. Soon after, we’ll begin to automatically switch campaigns that are still using max CPA bidding to target cost-per-acquisition (target CPA) bidding. If you’re using a max CPA bid, we recommend switching to a target CPA bid or the target return on spend (ROAS) flexible bid strategy.

If you’re like most of us, you were probably reasonably confused as to how Target CPA and Max CPA differed in the first place. Let’s go through what the differences were and why this change is actually a good one.

CPA Bidding

Max CPA

The max CPA option allowed advertisers to set a maximum price they were willing to pay for any single conversion.

A maximum CPA bid (max. CPA bid) is the most you’re willing to pay for each conversion, such as a purchase or sign-up. When you use Conversion Optimizer, most of your bids will be below whatever maximum you set.

This option can end up capping off conversion volumes if you’re not careful. If you set a max CPA below the historical CPA the predictive models will have a hard time reconciling your request against the historical signals used to capture conversions at your max CPA.

If your top converting keywords are converting above the maximum CPA you’ve set, then those conversions are no longer desirable because they are outside of the max CPA. This is why you may see a slowdown in conversions when you initially enable conversion optimizer using the max CPA bidding model.

Target CPA

Target CPA is a bit more flexible. Instead of giving Google a set price to stay below; you are setting a goal for the system to optimize toward.

A target CPA bid is the average amount you’d like to pay for a conversion. Some bids will be above this target and some will be below it, but altogether, the cost per conversion should average to the Target CPA you set.

I actually prefer this setting so that I don’t have to manually look out for conversions that are hitting above my max CPA. The system will include those in the predictive models used to dial things down to hit your target CPA. This means I’m not sacrificing conversions in favor of a maximum CPA and I’m less likely to be capped on volume.

The flexibility built into target CPA is also why you will see a variance in CPA as the tool works to optimize to your target. Some conversions will have a higher than desirable CPA, others will have lower. But in the end, your overall CPA should be at your target CPA goal. If the CPA is above your target on any given 30-day snapshot, it may be due to an inconsistency in your target vs. your history or due to low conversion volumes that may be throwing off the predictive modeling.

What Does The Change Mean?

Google will be moving your campaigns to target CPA from max CPA unless you take care of this first. If Google automatically updates your account, you may end up with inflated costs and CPAs if your campaigns were running on max CPA and that max is set higher than you’d like to actualize in order to account for outlier conversions.

If you’re already on target CPA, you won’t see any changes at all.

I highly recommend checking out your conversion optimizer settings and making any needed changes to your campaigns before Google sweeps through and makes those changes for you.

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6 Responses to “AdWords Conversion Optimizer Changes: No More Max CPA”

  1. Too bad, guess we’ll have some adjusting to do. What’s the source for this?

    By the way, target CPA and MaxCPA aren’t that different. In both cases Google focuses on setting the optimal bid only only only with regards to the CPA goal. This is optimization in a very narrow context.

    Neither target nor MaxCPA are bidding towards a campaign goal. If your target CPA is $10 and you are currently at $15, the tool won’t try to compensate. A third party tool, or an account manager might work like that and try to get some cheaper conversions below the target so the average would be $10. Conversion Optimizer will just bid towards $10 for the next conversion.

    The difference between target and MaxCPA is actually pretty subtle. Conversion Optimizer translates CPA into CPC. With MaxCPA you get MaxCPC, which is just a bid. Target CPA leads to target CPC, which in turn has to be translated into a MaxCPC.

  2. Hi Martin,

    The source is quoted in the post, it’s a silent announcement that has shown up in the support docs. Here’s the link again: https://support.google.com/adwords/answer/3290319.

    Conversion optimizer actually does work toward a campaign goal based on your set target or max CPA. The system builds a predictive model based off of the last 30-days of data and raises and lowers your bid based off of that model.

    The tool is so sensitive it knows, based on historical data, whether or not a user searching from a safari browser is like to convert. If the history shows they are the bids are raised to increase probability of winning the action, if the history shows the user is not likely to convert the system will lower bids to keep you from displaying. This is why bid modifiers are incompatible with the tool and why the more flexible target CPA setting allows for variance between individual CPA’s. I’ve seen this tool take a CPA down to $12 from $160 over a four month period, over time it absolutely works toward a campaign goal.

    You are accurate in that the system uses this information to create a CPC bid that is set to enter the auction for each query.

  3. Hi Heather,
    I’m with you on everything you wrote, except the part about a campaign goal. Maybe we’re talking about different things…

    Conversion Optimizer is very narrowly focused on the optimal bid. The tool estimates a conversion probability in real time based on signals like search query, device, browser, etc. Then it calculates the optimal bid: CPC = CPA x estimated conversion probability

    That’s all it does. It’s half brilliant (real time conversion probabilities) and half stupid (mindless application of a simple formula). There’s no portfolio optimization involved: it won’t go for a high CPA here and a low CPA there to get the highest overall number of conversions.

    It will use data from the whole campaign to refine conversion probability estimates. But every bid is simply the result of the formula.

    By the way, great catch with the silent announcement. It’s even in the German version…

  4. Martin,

    Your attention to detail is fantastic. And more to the point, you are correct in your assessment of Target CPA, it’s limitations and the fact that “There’s no portfolio optimization involved.”

    I believe Heather was using the term “goal” in a loose sense. E.g. using Conversion Optimizer to help in reaching big picture goals for CPA, conversions, etc. Something that directly involves the management, oversight and careful analysis of a PPC manager.

    If it was as easy as telling Google AdWords, “Hey, my goal is 500 conversions at $30 CPA!” we’d all be out of a job.

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