Targets from unit economics
Tell us your unit economics and we'll work out your targets.
The gap
Ask most advertisers where their target CPA came from and the honest answer is a feeling. It sounds affordable. A previous agency used it. It was what the account happened to be doing the month someone set it.
Google treats a target as an average, not a ceiling. It will pay well over the target for a good click as long as it can buy enough cheap junk to pull the average back. As the auction gets more expensive, more junk is needed per good lead. The target does not stop that happening. It causes it.
Meanwhile the account already knows a completed job is worth more than a form fill. The values are often sitting right there in the conversion actions. Under target CPA or maximise conversions the bidding never reads them. Every conversion counts as one.
What we do
We start with four numbers from you. What a lead of each type is worth, roughly. What proportion of each type closes. What the average job pays. What you can spend.
From that we derive a value for each conversion action. A form that closes 20 per cent of the time at £200 a job is worth about £37 once you allow for the jobs that fall through. A call that closes at 50 per cent is worth about £94. Those go into the account as the values, and the campaign moves to value bidding: maximise conversion value.
The rule
Since Google's 17 August change, the doctrine is explicit rather than implied.
If your budget is fixed, which is almost every advertiser we work with, the target comes off. Maximise conversion value with no target: the values decide what the machine prefers, and the budget decides how much it spends. That is what a budget is for. A target on a budget-capped campaign now binds from both sides, and there is no right number to put in the box.
A target ROAS earns its place in two cases only. When the budget genuinely does not bind and you will buy all the volume available at a given return, the target is the instruction, and it is derived from your margin, not from a trailing average. Or when a contract or cashflow makes efficiency a hard limit, in which case the target is a deliberate stop loss, set knowing it will bind.
On portfolio strategies we add a maximum CPC cap as a backstop, and it is checked in the weekly loop, because a backstop that starts binding has become a second constraint.
Where there is a call threshold, it gets raised at the same time. Moving to value bidding while a thirty second call still carries £80 tells Google to buy more thirty second calls.
What you get
A one-page target derivation you can read and argue with. The conversion value schema. The bidding setup. A quarterly review where the numbers are re-derived from what the CRM says happened.
Related: Your target CPA is a made-up number · Target CPA is an average, not a ceiling · Budget is the limiter
FAQ
We have always used target CPA. Why change?
Because it tells the bidding to ignore the difference between your best lead and your worst. If your leads all close at the same rate and pay the same, keep it.
Won't switching bidding cause a dip?
Changing the objective causes some settling. Changing it from a target that has been buying junk causes less than people expect, because the account gets better clicks almost immediately even if fewer of them.
What if I don't know my numbers?
Then we work them out from the CRM together. Most businesses know more than they think once someone asks the right four questions.