PPC Models and Bidding Strategy - CPA or CPC?

PPC - Pay Per Click - Every Dollar spent for every visitors brought via SEM model. The basic concept in PPC revolves around keyword. The art of advertising via PPC is straight forwad. Get the keywords, associate with AdCopy and bind these as an Adgroup. These Adgroup should belong to its parent Campaign with proper location and language targeting. Initially a campaign must run in CPC mode.

There are different bidding strategy for PPC -

  • CPC (Cost Per Click) Model
    • Auto Bidding
    • Manual Bidding
  • CPA (Cost Per Acquisition) Model.
    • Target CPA
    • Max CPA

The difference between CPC and CPA mode is that a campaign cannot opt into CPA mode until and unless it has 30 Conversion in last 30 days. CPC model is straight forward and for every search query where the keywords are eligible for an auction the ads would appear. A click over these ads would lead towards a cost resulting a visitor for the site.

It is mandatory to have the conversion tracking installed on the thank you page such that it could be measured by Google. Google Adword system starts learning the conversion under the environment they occurred and starts building intelligence. Once these CPC campaigns are eligible for migration to CPA an option button is available. The transformation from CPC to CPA occurs as per the value suggested by the Google Adwords at the campaign level. This suggested value is merely used for a smooth transition as they are used as a default value for the Adgroup. The keyword CPC is stored just in case the advertiser wish to switch back to CPC mode.

Target CPA is the indication of amount of money the advertiser is willing to pay per conversion, the target CPA is always respected and it would not incur over +-10% of the target CPA. While on the other end, Max CPA would work under the model where it is allowed to spend maximum amount indicated. Hence every other auction where there is eligibility for conversion in an auction the Ads would not be displayed once the max CPA has been achieved for the day.

The CPA is always respected and the ads are displayed considering various criteria such as origin of the visitor, time the ads is competing in an auction, browser setting etc. To improve the performance these PPC metrics should be measured constantly.

Which Model should we Chose?
CPA model is more or less a indication that the advertiser trust the Google Adwords system and let the adwords system decide when, where and which position Ad would be displayed. The advertiser has to completely rely on the system and there would be less maintenance on the advertisers end. There is no bidding required for keyword rather there is a need to update the CPA bid and review SQR (Search Query Result). The CPA is seen as Adgroup bidding  strategy.

Precaution when running in CPA:
  • Ensure that the conversion tracking code is placed across all the pages as the CPA model relies on conversion.
  • It is not a good practice to switch CPC to CPA and vice versa.
  • Periodic update of the CPA bid is essential for the advertiser.
CPC model is directly associated over keywords bidding strategy where user controls the bid over all the keywords. The Ads would always participate in the auction provided that there is enough budget and the search query triggering the ads are eligible to participate. SQR, Keyword Bid management are sole responsibility of the advertiser would have to dedicate more effort as compared to CPA model.

Regardless it be CPC or CPA a constant monitoring over the traffic, conversion  along with its main metrics is a must. Benchmark data and understanding PPC metrics which drives performance are vital towards success of any Campaign.

Please read more about CPA bidding strategy.

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