Lower Your Bids: Start by understanding what a good CPA figure would be for your business based on your average cost per click and typical conversion rate.
Average CPC / Conversion Rate = CPA
This is a way to measure if you are going to be able to hit your target CPA at your current max CPC bid levels.
So let’s say you want your CPA to be $10.00 and your conversion rate stays pretty consistent at 7%. Right now, you are paying about $1.00 per click. So our equation looks like this:
$1.00 / 7% = $14.28
You can see that with your current average bid amount and conversion rate, you should expect a CPA around $14.28, which is higher than your goal of $10.00.
As a result, you should review your keyword bids and see if you can lower them incrementally without giving up too much ground on ad position. A good rule of thumb for bid adjustments is roughly 15%; this is true of both bid increases and bid decreases.
Target More Specific Keywords at a Lower Cost: It stands to reason that more specific keywords (long-tail keywords) tend to cost less, as they are not as frequently searched and typically don’t have aggressive competition around them.
If your account is relying on a large amount of broad head term keywords (head terms are keywords that are one or two words), chances are you could be doing a bit better by identifying better, longer keyword phrases that are very specific to your business.
The best tool to use in WordStream to identify long-tail keyword opportunities and add them to your account is QueryStream:
QueryStream provides a feed of your raw search query data so that you can see exactly what triggered your ads and what kind of queries you may want to add as negative keywords or new keywords to the account. If you are using a good amount of broad match keywords, chances are you will see some interesting search queries come through here that you may want to vet out and add as new long-tail keywords to the account.
Using more long-tail keywords in the account with more restrictive match types like phrase and exact match will result in more qualified clicks at a lower cost. By lowering your bids on more general terms (one word or two-word phrases, mostly), your CPA will be incrementally reduced.