This is not a proper study, so don’t go and do your super scientific comparative study and come back like the smart cookie you are and tell me I’m wrong. This is purely a “hey, I noticed this correlation over many campaigns” type scenario. I hope the info is useful in case you hadn’t considered it.

So here it is:

In Lead Acquisition campaigns, it’s not unusual to establish and manage the Cost Per Acquisition. In fact, you’d probably want to watch that carefully and understand how Brand, Non-Brand, Generic and Competitor budget siloes generate (sometimes / usually) dramatically different values for CPA.

This is the very reason why you shouldn’t mix Brand keywords with Generic keywords in a campaign using the same budget and bid optimisation strategy. But that’s a different article.

This article is about the ratio of CPA to Daily Budget, and a simple observation. And maybe a little common sense.

I have noticed that when a campaign’s CPA becomes a significant percentage of the daily budget, the auto-optimisation in the Google Ads platform struggles to tune toward successful and consistent acquisition.

Think of it this way:

If your CPA was larger than your daily budget, Google is trying to win you less than 1 lead per day to stay within your constraints. That literally means that some days, it will NOT win you any leads, and worse: it expects not to! It’s probably unable to build a statistical model to map success.

By the way, this does assume that you’re also being realistic about the CPA you set. Not many Lawyers will land a viable lead for $2 CPA, or even $20 for that matter. Knowing what the “going rate” is for viable leads is also another topic.

So, while being a little arbitrary in my way of thinking, I have figured that the minimum CPA : Daily Budget ratio per campaign is about 1:10. i.e. if your CPA is $10 you really should assign at least $100 daily budget to that campaign to get the most out of Google’s AI system.

This is a case of Big Data needing Big Data to work. By winning 1 lead per day or less, your campaign is micro-granular. By winning 10+ leads per day or more per campaign, you start to get into the realm of Big Data (or at least get to leverage it).

You will generate many more impressions and a higher number of clicks, out of which the AI system can get a better statistical model of success for your specific offer and website. Without this info, it’s more like guesswork.

I figure, for an average campaign with a $10 CPA and a $100 budget, it generates say 100 Clicks from upwards of 500 Impressions. These are just made-up numbers but gives you an idea of why this scale makes optimisation more realistic – it starts with a larger number of impressions served and the system is more likely to be able to determine a funnel model from that.

So, if your average CPA was $20, you ought to assign a minimum of $200 per day.

I would recommend applying this principle to every single campaign.

Now that’s not to say you should assign exactly 10x CPA to each campaign. Some campaigns and some CPAs yield greater returns than others, so again, another article on that some time. But just regard this is a guiding minimum investment you should expect to have to make to leverage automation in bid strategy.

If you want to know about these topics, let me know:

• Budget Siloes.
• Going Rate CPAs.
• CPA (or tROAS) Bid Strategy Self Cannibalisation.
• Market Capacity measurement.
• Market Share measurement.

Feel free to start a conversation here or email info@rankpower.com