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How does target cost-per-acquisition (CPA) bidding determine the optimal cost-per-click (CPC) bid?

How does target cost-per-acquisition (CPA) bidding determine the optimal cost-per-click (CPC) bid?

  • It uses conversion history to set higher bids when a conversion is more likely
  • It sets CPC bids as one-tenth of the current CPA bid setting
  • It bids a static CPC value based on the current maximum CPC settings
  • It adjusts CPC bids based on existing bid adjustments

The correct answer is:

  • It uses conversion history to set higher bids when a conversion is more likely

Explanation: Some conversions may cost more than your target and some may cost less, but altogether Google Ads will try to keep your cost per conversion equal to the target CPA you set. These changes in CPA take place because your actual CPA depends on factors outside Google’s control, like changes to your website or ads or increased competition in ad auctions. Additionally, your actual conversion rate can be lower or higher than the predicted conversion rate.

For example:

if you choose a target CPA of $10, Google Ads will automatically set your CPC bids to try to get you as many conversions at $10 on average. To help improve your performance in every ad auction, this strategy adjusts bids using real-time signals like device, browser, location, time of day, remarketing list, and more.

More read: https://support.google.com/partners/answer/6268632?hl=en

Ali Raza

Ali Raza is a Web Developer and Digital Marketing Consultant.

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