Google Ads: how to optimize your cost per acquisition (CPA)?

Written by Thibault Lbt on 22 November 2014.

The CPA (cost per acquisition) represents the amount of money you have to spend to achieve a conversion. In an AdWords campaign, it is determined by two factors : the CPC (cost per click) and the google-ads-how-to-optimize-your-cost-per-acquisiconversion rate. Thus, optimizing your CPA will consist in analysing these elements. Note that you can set up your conversion goals in AdWords and thus get accurate cost per aquisition statistics.

1/ Optimize your cost per click (CPC)

The cost per click (CPC) is the price you pay each time a user clicks on your ad. As an advertiser, you decide of your maximum CPC. Google AdWords uses a second-price auction system, so the most you'll pay is what's minimally required to beat the ad rank of the advertiser below you. The ad rank is used by Google to determine your ad position and whether your ads will show at all.

Ad Rank = CPC bid × (quality score + expected impact of extensions and other ad formats)

Therefore, getting a higher quality score will lower your average CPC. The quality score is determined by the following statuses :

- The expected click-through rate : it's a prediction of how often your ad will be click on when shown. Google takes into account how well your keyword has performed in the past, based on your ad's position. To see the expected click-through rate status for your keywords, go to the keywords tab on your campaigns page and hover over the speech bubble icon next to a keyword.
- The landing page experience : an ad is only useful to users if its landing page help them finding what they are looking for. Thus, highly relevant landing pages yield a higher score. Make sure that your landing page has relevant and original content, is easy to navigate and be transparent about the nature of your business.
- The ad relevance : Google evaluates this status by analysing the langage in your ad to determine how related it is to the user's query. Like for the expected click-through rate and the landing page experience, there are three possible statuses (above average, average or below average) that can be seen in the keywords tab.

Google also considers the expected impact of ad formats impact : visual enhancements to search ads that more prominently display information about your business (phone number, consumer ratings, your website's domain in the headline, etc.). These enhancements, which often appear in ads above search results, can include additional content from your website or relevant third-party content. You can add these manually or they can be added by Google's automated formatting systems.

2/ Optimize your conversion rate

Ad quality impacts price: by improving your ad quality and adding ad formats you can improve your ad position and end up paying a lower CPC. Optimizing your conversion rate from this traffic is now a matter of user experience on your website. Make sure you website is easy to navigate, display clearly the information users are looking for and has few but obvious calls to action.

Conversion Rate = Number of conversions / Numbers of ad clicks

Since the web traffic from smartphones and tablets is booming, make sure your website is mobile-friendly. If it's not, make your web design responsive. To go faster you can also develop only of few pages dedicated to mobile users. Do not underestimate the impact of your ads on mobile because of a low conversion rate. In fact 65% of users begin a search on mobile and convert later on desktop, it's a multiscreen process. In this logic, integrate the display network in your campaigns to gain a notoriety that will postively impact your CTR in search.

Take advantage of contextual targeting on mobiles (localization, interests...). Adjust your CPC bids to your customers. For instance, increase your bids (+50%) on ads that will display in a 5 kms area around your shop.

The way people use a website does not alway match with what it was designed for. From the publisher point of view, users will read most of the page and follow a path that was logically build to achieve a conversion. In fact, users don't read pages: they scan them. Do not overestimate the time people are willing to spend on your website. Make it as simple as it can be. By way of conclusion, remember what Albert Einstein used to say: "If you can't explain it simply, you don't understand it well enough".

In order to better understand user behavior on the internet and how you can improve your website accordingly, have a look at Steve Krug's book: "Don't make me think: a common sense approach of the web usabilitiy".