How to Decrease CPA with Dynamic Search Remarketing
December 20, 2023
Sumeet Sinha
What has changed from the original post:
Added technical details of CPA and DSR focussing on “how to” so it is optimized for anyone searching for these strategies.
Summary: Learn how to drive cost-effective PPC campaigns with Dynamic Search Remarketing (DSR), a powerful strategy to reach new customers and re-engage past visitors. Optimize DSR campaigns for lower CPA by employing keyword selectivity, negative keyword utilization, ad group organization, and RDSA implementation.
Digital marketing is a very competitive space with short consumer attention spans and rising costs of advertising. Indeed, the cost per acquisition (CPA) for each customer can end up being very high. A tiny fraction of one-time customers become returning customers which means very little high lifetime value (LTV) can be earned.
There is a wide variety of tools available, and they are fairly powerful and capable of delivering results. Many have their own unique features and benefits. Some of the most popular PPC tools include:
- Google Ads: This is the native PPC platform for Google Search and other Google properties. It offers a wide range of features, including keyword research, ad creation, campaign management, and performance tracking.
- Microsoft Ads: This is the native PPC platform for Microsoft Bing and other Microsoft properties. It offers many of the same features as Google Ads, but it also has some unique features, such as the ability to target ads to enterprise users.
- Amazon Advertising: This is the native PPC platform for Amazon.com. It allows advertisers to target their ads to people who are already shopping on Amazon for products or services like theirs.
- Facebook Ads: This is the native PPC platform for Facebook ads. It allows advertisers to target their ads to people based on their demographics, interests, and online behavior.
- AdRoll: This is a third-party PPC platform that allows advertisers to target their ads to people who have visited their website or used their app. It also offers features for retargeting and display advertising.
- SEMrush: This is an all-in-one SEO and PPC tool that offers features for keyword research, competitive analysis, ad creation, and campaign management.
- Ahrefs: This is another all-in-one SEO and PPC tool that offers similar features to SEMrush.
In addition to these general-purpose PPC tools, there are also a number of specialized PPC tools available. For example, there are tools for creating landing pages, managing social media advertising, and tracking PPC performance.
Which PPC tool is right for you will depend on your specific needs and budget and no matter which PPC tool you choose, it’s important to experiment and track your results carefully. This will help you to determine what works best for your business and improve your performance over time.
What is most important about doing PPC well though is the ability to be creative and to use a combination of the conventional and the new to create a powerful system that works to boost your business.
The objective should not be to merely acquire a lead; you instead will want to acquire leads at costs that are not prohibitively high. One such strategy to think about is Dynamic Search Remarketing (DSR).
The Conventional: DSA and PLA
Sometimes with 1000s of products, you don’t have the time to build out every single product. Along with the time challenges, many of these keywords won’t have search volume. Your focus needs to be on building campaigns for your top-performing products and categories.
– Amanda West-Bookwalter on PPC Hero
Dynamic Search Ads (DSAs) have been an important tool for e-commerce businesses for a long time. DSAs use your website content to generate and show ads to people who are searching for relevant keywords. They can be a great way to reach new customers and drive traffic to your website, especially if you have a large inventory or a frequently changing product catalog.
You can target search keywords with DSA, the more precise the better. They also offer the added benefit of allowing you to find new keywords through their search query report.
If you have a huge range of products, it may not always be possible to set up keywords for each product in your catalog. In such cases, use the DSA to target categories. The targeting may be broad, but it can be extremely cost-effective.
Another option here is the PLA (Product List Advertising) which offers greater visual appeal and. works much like the DSA; only that the displayed advertisement includes an image of the product, plus other relevant text information, e.g. the price. PLA is most useful when you set the keyword to a category.
Imagine an electronic eCommerce website. For a website that has a large inventory, it may not be possible to add keywords to everything for a niche, say headphones. It would be much easier to target “headphones” as a category. A PLA for the category might even use your advertising feed to get images and information about new products to display in your advertisement automatically.
Learn here: Lead-based marketing offered by Techmagnate
RLSA the Powerhouse
A Remarketing List for Search Ads (RLSA) is a comparatively new customer acquisition strategy. RLSA includes features of both DSA and PLA but is remarkably different in the way that it approaches the problem of customer acquisition.
In standard search campaigns, your bids, ads, and keywords are the same for every search and every searcher. But if you knew which searchers represented higher value prospects, you might want to bid higher, show on broader keywords, or present different ads to these customers to improve your results.
“Remarketing lists for search ads let you do just that. You can use your existing remarketing lists to more effectively reach past site visitors so you can get more conversions and potentially better ROI”.
– ThinkWithGoogle
Remarketing Lists for Search Ads (RLSA) allow you to tailor your search campaigns based on whether a user has previously visited your website and the pages that the user viewed. RLSAs can be used in two ways:
- Making bid adjustments: This means that you can bid higher or lower for your ads depending on whether or not a user has visited your site before. For example, you might bid higher for users who have visited your product page but not yet made a purchase, in order to encourage them to come back and complete their purchase.
- Set up search ad groups: These should be triggered and show ads if a user is on your Remarketing list. This can be useful for targeting specific groups of users with very specific ads, for example, all users who visit a website, create a cart, and then abandon it.
RLSA is not meant for a wider audience that gets you new acquisitions. It is meant to strengthen existing leads and customers and remind them of your website.
RLSA targets existing customers or people who have visited your eCommerce website at least once. Targeting those who have already visited your website, or done business with you is significantly easier; at least in theory. People who have visited the website or done business with it before, have already been exposed to the brand and are likely to do business again.
Ads of this type can even draw from the visitor’s behavior and history on your website to show them highly targeted advertisements. Since the set – these advertisements are displayed to – is reduced, you can use wider keywords for targeting.
Continuing on our previous example of an electronics eCommerce website, let us assume a customer visited the website, checked out the hard disk category, and perhaps looked at a couple of disks.
RLSA will show this person targeted PLA-style advertising that focuses on the hard disks available, and those the person noticed. Additionally, the search web will go wider, and this customer could see your hard disk advertisement even when searching for something as wide as a “storage device.”
In fact, you do not need to work hard to see this work. Simply visit a few shopping websites, and see the advertisements you are served get populated with the product pages you visited on those shopping websites. That makes for an encouraging rate of conversion and is excellent at increasing the Customer Lifetime Value (CLV).
Hello DSA, Meet RLSA
We have seen that DSA is great at its job, and RLSA gets the job of acquiring and converting leads, done quite well too. Our objective, however, is lowering costs and maximizing CPA and CLV.
We could use both DSA and RLSA for excellent results individually, but how about we get the two together and make a campaign that is larger in sum than both individual parts?
Welcome to Remarketing for Dynamic Search Ads or Dynamic Search Remarketing (RDSA) (), a combination of DSA and RLSA. RDSA is not an official offering from Google Ads, but rather, a thoughtful and intelligent combination of DSA and RLSA optimized to get you the results you need.
It works via a “remarketing list” of people who have visited your website followed by the creation of a dynamic search ad campaign. The greatest benefit of an RDSA is that it works as effectively as DSA, and can have better conversion results than the RLSA.
This combination allows for greater customer retention, a lower cost per acquisition, and a higher CLV.
Looking at the Best CPA
The effectiveness of any campaign cannot be gauged unless we know the cost per acquisition and the profit the campaign can deliver.
This makes it necessary to know how to calculate cost per acquisition. For a very simple calculation, you could just keep track of the number of acquisitions, and the cost of the campaign. In this case, the cost per acquisition would simply be the cost of the campaign divided by the number of leads.
In order to properly assess what you are going to spend in each lead marketing channel, it is necessary to understand what you are willing to spend to acquire a new customer (cost per acquisition), and ultimately, the lifetime value of the customer.
– Ryan Kelly on PearAnalytics
For example, if you ran a campaign that cost $200, and acquired 40 new customers, the CPA is simply 200/40, which comes out to be $5. For fixed time durations, this formula is effective.
However, if you’re really interested in acquiring customers at low cost over the longer term this requires a more detailed cost-per-acquisition formula that accounts for customer lifetime value (CLV). CLV is the profit that comes from a returning customer.
The greater the activity period of the customer, the greater the number of sales and the greater the CLV. For example, a customer buying ten items every year for five years has a high CLV, whereas a customer buying similar five items for two years provides a lower CLV. A good industry thumb rule is that CPA should be at about 15% of the CLV.
Once you know the net CLV you can then figure out the CPA threshold which can then help make campaign-related decisions. If your CPA exceeds the CPA threshold from the CLV, it might be time to rethink the campaign. One other benefit to keep in mind is that the RDSA has a lower CPA as compared to individual DSA or RLSA campaigns.
Setting up RDSA
Since Display Search Remarketing is not currently available as a separate tool, one has to create a combination of DSA and RLSA for RDSA to work
As the first step, your website should be set up for RLSA and dynamic remarketing to work. Since this requires script and code additions to your website, it is always advisable to get this step done first.
The next step is to kick off a DSA campaign. Set up a DSA campaign as you would usually do, but this time, choose the “audience” tab and choose a wider audience. You could even choose to go super wide and select “all visitors.” If you cannot find the audience tab, look under “All Campaigns” or use the Ads Editor for easier access.
The primary purpose of this campaign is to bring visitors to your website. Once you get visitors, it becomes much more beneficial to kick off an RLSA campaign targeting the kind of visitors you wish to target. As the next step, one would set up the ad to work as “Target and Bidding.”
Congratulations, your RDSA campaign is now all set to work! When you do go the extra mile to set up an RDSA campaign, offer it as a bid that is higher than your DSA campaign, but slightly lower than the RLSA campaign.
As you will begin to notice, our RDSA campaign will show up in search results for visitors even without having to bid on specific keywords. Moreover, since ads will be displayed to people who have already visited your website, you can bid higher than a regular DSA knowing that the chances of conversion are higher.
An RDSA campaign is intended to keep your CPA as low as possible. A way to accomplish this is by increasing the CLV. A customer can be encouraged to regularly visit your website and do business, increasing the CLV of the customer and allowing you to lower your CPA.
In effect, the cost of generating a new lead is a lot higher than doing business with a returning customer. Thus keeping a higher CLV helps keep the SPL low. Advertising campaigns like the RDSA can effectively ensure that your business is always in the mind of the target customer, who would then be more likely to return for new business.
To summarize there are many ways to use DSR to reduce CPA:
DSR campaigns can target a wide range of keywords, so it’s important to be selective about which keywords you want to target, this includes negative keywords.
Use negative keywords to exclude irrelevant searches and you can avoid wasting your budget on clicks from people who are unlikely to convert.
Another important tip is to set ad groups based on product categories or landing pages. This will help you to create more relevant ads and landing pages for your target audience. For example, if you’re selling shoes, you might create separate ad groups for men’s shoes, women’s shoes, and children’s shoes – in short optimize for categories!
Finally, go beyond the vanilla DSA, implement RDSA, and see the difference yourself.