Optimize target CPA with maximum bid limit

Anyone who has some experience with Smart Bidding knows that the algorithm can overbid big time. Usually, it’s not a problem, and I don’t see anything bad when the actual CPC is getting close to the average cost per conversion. But (there is always a but) when your daily budget is rather small and you can get only one or two conversions for it and / or you are limited by budget it starts to be a problem.

Let me give you an example. Here’s a screenshot of the search terms report in one of the Google Ads accounts I manage:

As you can see, the actual CPC can easily get close to the average cost per conversion. Basically, you can find yourself getting one or two clicks per day if your budget is small. It’s fine when these clicks turn into a conversion, but you still will be missing a decent impression share.

This problem becomes especially noticeable when you switch from Manual CPC to Smart Bidding. Here is an example of how I messed up with it in another account:

The experiment showed that Smart Bidding is not always more effective than conservative Manual CPC. See how the bids increased by two to three times. Even the higher conversion rate couldn’t compensate for this.

Solution: Portfolio bid strategy

One of the features I don’t see used often is called Portfolio Bid Strategies (PBS). It has a lot of benefits one of which is the option to set maximum bid limit when you are using Target CPA. Unfortunately it doesn’t work with Maximize Conversions, so whenever I don’t have a lot of data I just set my tCPA to slightly higher compared to whatever data I have at my disposal.

Here is how it looks in Google Ads interface:

By the way, despite the word Portfolio in the name, you can use PBS it for a single campaign without creating a shared budget.

Now let me share a recent success with it. It’s a new campaign with a rather tight budget that was initially launched with Manual CPC:

Yes, it’s only been a week, but you can already see that not only has the CPC not grown; on the contrary, it has decreased. And Smart Bidding has no power to inflate my CPC.

Try it if you haven’t.