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Understanding Target Cost Per Acquisition (CPA) in Google Ads

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As an HVAC business owner, you know how tough it is to rise above the competition. Google Ads can give you a leg up by putting your company’s website front and center in the search results, at the very top of the page where potential customers can see it when they search for HVAC keywords. 

If you aren’t an expert in digital marketing for HVAC contractors, though, figuring out which bidding strategy to use for your ads can be quite the challenge.

Enter target cost per acquisition (CPA), a relatively hands-off bidding option designed to help your business get the most bang for its buck. Below, learn more about target CPA to help you decide whether this strategy makes sense for you.  

Everything You Need To Know About Target CPA for Google Ads

When you first set up a Google Ads campaign, you’ll have to tell Google how much you’re willing to pay (bid) to show your ads to potential customers. You can set your bid manually, but unless you’re a digital marketing expert, your ad spend could end up far higher than you’d like. Plus, you’ll have to spend a lot of time keeping tabs on your budget, and that’s just not in the cards for most busy HVAC pros.

That’s why Google offers eight different automated bid strategies, one of which is target cost per acquisition. The others include:

  • Cost per view
  • Viewable CPM
  • Enhanced cost per click (ECPC)
  • Target return on ad spend (tROAS)
  • Maximize conversions
  • Maximize clicks
  • Maximize conversion value

Target CPA is a bidding strategy in which you tell Google your desired cost per conversion. Google calculates your cost with this formula:

Average target CPA = Ad spend / Number of conversions

To use it, all you have to do is choose your target CPA, and then Google automatically calculates the cost per click for your ads. Keep in mind that you won’t pay the same amount for every conversion. Some of your conversions will cost less, others more.

Your target CPA also directly influences how many conversions you’ll get. If you set a high target CPA, Google will be able to put your ad in front of lots of potential customers and rake in more conversions for you. If your target CPA is on the low side, expect fewer conversions.

Should Your HVAC Business Use Target Cost Per Acquisition Bidding Strategy?

Target cost per acquisition only works if you’ve set up conversion tracking and already have at least a few conversions for your ad campaign. Google relies on historical conversions and a variety of signals, such as browsing history, location, and device type, to find potential customers who are likely to convert.

You’ll need at least 15 conversions for your campaign within the past 30 days to use target CPA. However, it’s a better idea to have 30 conversions or more before trying this strategy. Google uses this data to know what worked well for you in the past.

Target CPA may not be the best strategy to use if you want total control over your bidding. Also, if you sell products or services at wildly different price points, tCPA won’t work well for you. This strategy makes the most sense for HVAC businesses that sell products and services at fairly similar prices.

Expect a Learning Period When You Start Using Target CPA

Target cost per action can be an incredibly helpful bidding strategy, but it’s not perfect, so don’t expect it to deliver a ton of conversions right out of the gate. Target CPA comes with a learning curve, and you can give Google Ads a helping hand by following these best practices for tCPA.

Google’s algorithm takes about seven days to familiarize itself with your campaigns. During that time, your conversion rate could go down, and your CPA might increase.

This can be discouraging, but stick with it! Once the algorithm learns from your campaigns, you should start to see more impressive results.

You can check to see whether the algorithm is still in the learning phase by looking at your campaign status. In the Status column, look for “Eligible (Learning).”

Set a Realistic Target CPA

It’s true that this bidding strategy could save you money, but you don’t want to set your target too low at first. For instance, if your campaign had an average CPA of $100 over the past few months, you shouldn’t set your tCPA to $50 or less. The lower your budget is, the fewer ad auctions Google can enter and win for you.

Google will let you know if your budget is too low. If it is, you’ll see a “Limited by budget” message on your campaign page.

Instead of going low, it’s smart to set your tCPA a bit higher than your recent average CPA during the learning phase. Once the algorithm adapts to your campaign, you can lower it to a more reasonable number.

Group Products and Services Into Similar Campaigns

Does your HVAC business target both branded and unbranded searches? If so, it pays to separate those searches into different campaigns. Mixing different types of searches in one campaign can “confuse” the algorithm, which means you probably won’t get the results you expected.

How To Set Target CPAs for Ad Groups

Setting a target CPA for your ad groups isn’t terribly complicated. Here’s how to do it:

  1. Log into your Google Ads account and go to your Campaigns page.
  2. Click “Bidding,” then click “Change bidding strategy.”
  3. Choose “Target CPA” from the list.
  4. Enter your desired target CPA. If Google has enough data from your campaign, it will recommend a good target CPA for you.

Boost Your Conversions With ServiceHawk

Now that you’ve learned about target cost per acquisition, are you ready to take your HVAC business to the next level? Reach out to ServiceHawk today! We can help you learn how to build a brand ecosystem and send conversions skyrocketing.

For a free strategy session with our experts in Google Ads for HVAC companies, call (888) 967-1377.

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