"Dear child has many names" and especially when it comes to Google Ads. CPC, CPA and CPM are bidding strategies on the Google Ads network and they represent the following:
- CPC = Cost-Per-Click
- CPA = Cost-Per-Action / Pay-Per-Acquisition
- CPM = Cost-Per-Thousand / Cost Per Mille
CPC - Cost-Per-Click
This bidding strategy is the most widely used. CPC means that you bid on specific keywords when a click is placed on the ads associated with the selected keyword. No matter how many times your ad is shown when searching on Google, you will only pay when your ad is clicked.
With CPC, you can choose the amount that you want to bid the maximum per click. You can regularly choose to raise or lower this, as this is an auction that does not stop. The goal is therefore to achieve a click price that is as cheap as possible. In most cases, the highest bidder will see their ad appear at the top of the search results when a search is performed on that keyword.
However, there are exceptions, which include when Google's quality results are used (Read about Adrank here) to calculate the actual price. Ie. That you are not necessarily going to be at the top because you are the one with the highest bid.
Extended CPC
You also have the option to set the bidding to "Extended CPC". Extended CPC is broadly the same as standard CPC. The difference, though, is that you allow Google to adjust your bids higher in searches from users who have a greater chance of converting. Conversely, Google also bids lower on searches that are less likely to convert.
The thing to keep in mind is that expanded CPC has the greatest potential for success if you have enough conversion data. How much is sufficient depends on the product / service. It is just important that one does not choose to put it on without having enough data. In addition, you also lose a bit of control over your campaigns, as you leave a lot to Google in terms of bidding.
CPA - Cost-Per-Action / Pay-Per-Acquisition
CPA, or Target CPA, is a bidding strategy to achieve as many conversions as possible, based on a set target price that you set to Google. Through advanced "machine learning", Google will use parameters such as: campaign history, context signals etc. to set the bid that makes you most likely to achieve the desired CPA. However, it is important to have enough data for Google's Algorithm to make the most of this "machine learning".
CPM - Cost-Per-Thousand / Cost Per Mille
This bidding strategy is based on paying per 1000 impressions of your ad. Here, there is not necessarily a focus on clicks and conversions. If someone clicks on your ad, it's free, and if it's a conversion as a result of an ad, it's free. This strategy is optimal if one's focus is on creating brand awareness. This can i.a. be new products that you want to focus on. Therefore, this focus is not on direct sales, but on creating a "buzz" around a company or product / service.
So what should I choose?
Yes, that's a perfect question to ask! The answer depends on where your focus is on the campaign in question.
Target CPA - May be right, however, it is important to have plenty of conversion data before you even consider using this strategy, otherwise Google's algorithm may hit right next door.
CPM - We will only recommend if you have created awareness about a product or service, we generally experience better results with the 2 other options. However, there may be situations where this makes good sense.
Manual CPC - Gives you the greatest control, here you can control what you bid on which keywords. We recommend using this strategy as much as possible, here you have the most control, and you can work much more in the details, as you can control it yourself. If you have several thousand products, it can quickly seem overwhelming. Here you can advantageously give Google some more control.
Be aware of your options, and be sure to evaluate and make your decisions based on the various campaigns and not overall for the entire account. That way, you can work more in the details, and be able to shape your ads yourself.