Solved: Target CPA using wrong conversions?

Hi there,

Thanks for reaching out!

That's a really sharp question, and it gets right to the heart of a problem that trips up a massive number of advertisers on Google Ads. I'm happy to give you some initial thoughts on it. The short answer is that you're right to be suspicious. When you set a target CPA, Google's machine learning doesn't inherently know which of your conversions is actually better for your business. It just sees 'a conversion' as a single, uniform goal.

But the real fix isn't about tweaking your tCPA strategy; it's about fundamentally changing the instructions you give to Google. It’s about moving from telling it what you want to *spend* to telling it what you want to *earn*. Let's get into it.

Let's unpack why your tCPA strategy is probably broken...

Right now, your setup is telling Google something like this: "Hey Google, go out and get me a conversion, any conversion, and I'm willing to pay up to $50 for it."

The problem is, Google’s algorithm is incredibly literal and, in a way, quite lazy. It will fulfill your request in the most efficient way it knows how. It sees "call" and "form capture" as two identical tick boxes. Both are worth exactly one 'conversion' point in its system. It has absolutely no idea that a phone call might lead to a sale 90% of the time, while a form capture only converts 10% of the time and is often just a competitor checking your prices.

So, what happens? The algorithm starts looking for the path of least resistance. It quickly learns that it's much easier to get someone to quickly fill out a two-field form than it is to convince them to pick up the phone and have a proper conversation. The result is predictable: your campaigns will start to skew heavily towards generating more form captures, simply because they are easier and cheaper to acquire. Your overall conversion *volume* might look okay, but the quality of your leads will plummet, and your actual sales will stagnate or drop. You'll hit your $50 CPA target, but your business will be going backwards.

It's a classic trap. You're measuring and optimising for a proxy metric (CPA) instead of the metric that actually matters (profit). You've basically given your master salesperson a target to collect 100 business cards a day. They'll just stand on a street corner handing them out, rather than going to the industry conference where the real buyers are. It's the wrong incentive, and it leads to teh wrong behaviour.

We see this constantly when we take over accounts. For one client, a medical job matching SaaS, the initial Cost Per User Acquisition was £100. We were able to reduce this to £7, but an aggressive focus on just the CPA number can be a trap. It can lead to optimising for low-quality, time-wasting leads just because they are cheap to acquire, without making the business any more money. That's why the first thing we do is correct this fundamental flaw by shifting the focus from cost to value.

I'd say you need to stop thinking about cost and start thinking about value...

This brings us to the core of the solution. You need to teach Google the language of your business. You need to show it what a good lead *looks like* in terms of pounds and pence. This is done through a feature called Conversion Values.

Instead of letting Google think every conversion is worth "1", you're going to explicitly tell it the monetary value of each action. This single change transforms the entire dynamic of your advertising. It moves the conversation from "How much does a lead cost?" to "How much is a lead worth?" which is a far more powerful question.

Let's stick with your example. You have two conversion actions:

• -> A phone call
• -> A form capture

To implement conversion values, you need to do some basic business maths. Don't worry, it's not complicated, but it is absolutly vital. You need to work out what a lead from each channel is actually worth to you. Here's a simplified way to think about it:

1. Calculate your Lead-to-Customer Rate (LCR): Out of every 10 leads you get from a channel, how many become paying customers?

2. Determine your Average Customer Value (ACV): What is the average initial revenue or profit from a new customer?

Let's imagine some numbers for your business:

Look at that. Suddenly, you have clarity. A phone call isn't just "a conversion"—it's a $600 asset. A form capture isn't just "a conversion"—it's a $100 asset. A phone call is, in this scenario, six times more valuable to your business than a form fill.

Now, when you feed this information back into Google Ads, you're giving the algorithm a powerful new set of instructions. It no longer sees two identical goals. It sees one goal worth $600 and another worth $100. Its entire optimisation process will shift. It will start actively seeking out the kinds of people, using the kinds of keywords, at the times of day, on the devices that are more likely to generate a high-value phone call, even if it means getting fewer of the low-value form fills. You have aligned its objective with yours.

You probably should work out your lead values properly...

The example above is a good starting point, but to really dial this in, we need to go one step deeper and think about Customer Lifetime Value (LTV). The initial sale is often just the beginning of a customer relationship. A truly great customer might stay with you for years, upgrade their plan, and refer other business to you. A bad customer might churn after a month and require lots of support.

Calculating LTV gives you the true upper limit of what you can afford to spend to acquire a customer. The math is simple, but the insight it provides is profound.

Lifetime Value (LTV) = (Average Revenue Per Account * Gross Margin %) / Monthly Churn Rate

This formula tells you what a customer is worth in *profit* over their entire relationship with you. A common rule of thumb in healthy businesses is to maintain an LTV to Customer Acquisition Cost (CAC) ratio of at least 3:1. This means if your LTV is $9,000, you can afford to spend up to $3,000 to acquire that customer and still have a very healthy business model.

Once you know what you can afford to spend to get a *customer*, you can work backwards to figure out what a *lead* is worth. This is the number you'll use for your conversion value.

To make this tangible for you, I've built a simple calculator below. Play around with the sliders to see how small changes in your business metrics can dramatically change what a lead is worth. This isn't just an academic exercise; this is the strategic foundation for profitable advertising.

We'll need to look at setting this up in Google Ads...

Once you've used the calculator (or your own spreadsheet) to determine the value of your different conversion actions, the next step is to implement them inside Google Ads. Thankfully, this part is relatively straightforward.

You'll need to navigate to the 'Conversions' section of your account. You can find it under Tools & Settings > Measurement > Conversions. Here, you'll see a list of all the conversion actions you're tracking—you should see 'Calls' and 'Form Captures' in there.

Click on the name of one of the conversion actions, say 'Form Captures', to edit its settings. Inside, you'll find an option for 'Value'. You'll want to select "Use the same value for each conversion" and then enter the value you calculated. For example, based on our earlier calculation, you'd enter '$100'. Save your changes.

Then, repeat the process for your 'Calls' conversion action, this time entering '$600'. That's it. You've now officially taught Google Ads the language of your business economics. It's a five-minute job in the interface, but it has massive strategic implications.

This simple act of assigning value is probably the single most powerful optimisation you can make in an account that has multiple conversion goals. To make the process even clearer, here's a quick flowchart of the decision-making process you should be following.

You'll need to switch to a better bidding strategy...

Implementing conversion values is step one. Step two is where you reap the rewards. Once your account has been tracking these new values for a week or two (to give Google enough data to learn), you can and absolutely should switch your campaign's bidding strategy.

You will move away from Target CPA (Cost Per Acquisition) and graduate to Target ROAS (Return On Ad Spend).

Let's be cristal clear about the difference:

• Target CPA says: "Get me conversions for an average cost of $50 each." (It's focused on COST)
• Target ROAS says: "For every $1 I give you in ad spend, I want you to generate at least $X in conversion value back." (It's focused on RETURN)

Target ROAS is a fundamentally superior bidding strategy for any business that can assign a monetary value to its conversions. It directly aligns Google's machine learning with your primary business objective: profitability. You're no longer telling it to be cheap; you're telling it to be profitable. This is the mindset shift that separates amateur advertisers from professionals.

Let's look at a tale of two campaigns to see the difference this makes in practice. Both campaigns spend $2,000.

As you can see, Campaign A, the tCPA campaign, did its job. It spent $2,000 and got 40 conversions, for a perfect CPA of $50. But it did this by chasing cheap form fills. The total value generated was $6,000.

Campaign B, the tROAS campaign, looks like a 'failure' if you only look at CPA. It spent $2,000 and only got 18 conversions, for a CPA of over $111! But because it was laser-focused on value, it disproportionately captured the high-value phone calls. The total value it generated was $9,300—a full $3,300 more profit for the business from the exact same ad spend.

Which campaign would you rather be running? It's a no-brainer. This is the power of switching your mindset and your bidding strategy from cost to value.

This is the main advice I have for you:

To pull all of this together, here is a clear, step-by-step action plan for you to take your Google Ads account from a basic, flawed setup to a professional, profit-driven machine. This is the exact process we would follow if we were managing your account.

I know this might seem like a lot to take in, but I promise you this shift in perspective is the single biggest lever you can pull to improve your campaign performance. You're moving from just 'doing ads' to making a genuine, measurable impact on your company's bottom line.

Getting this right can be tricky, and miscalculating your lead values or setting up the bidding strategy incorrectly can be costly. The details matter, from ensuring your tracking is perfect to knowing how to interpret the data during the learning phase. This is often where having an expert pair of eyes can make all the difference, helping you avoid common pitfalls and accelerate your path to profitability.

If you'd like to walk through your specific account and numbers, we offer a completely free, no-obligation strategy session where we can dive into your campaigns and map out this exact process for your business. It might be helpful to have someone guide you through it the first time.

Regards,

Team @ Lukas Holschuh