Managing Your Cost Per Acquisition (CPA)
Cost Per Acquisition (CPA) tells you how much you’re spending to generate a specified action (web page view, sign up, purchase, etc.). CPA (appears in AdWords as cost per conversion) is the cost of the total ad spend divided by the number of conversions. This key metric will give you a good idea of whether or not your overall campaign is profitable from a high-level view. For example, if your profit from a conversion is $100 but your CPA is $140, you are at a $40 loss for each sale/conversion you receive. Using the same example, if your CPA is $60, you will have a $40 profit.
There are four main ways to effectively manage your CPA:
- Lowering the Cost-Per-Click (CPC): In the next section, you will learn how to lower your CPC by raising your Quality Score.
- Raising Quality Score: Quality Score is determined by the relevance of your ads, keywords and landing pages to someone viewing your ad. Raising your Quality Score will get your ads in front of your target audience.
- Raising Click-Through Rates (CTR): CTR is calculated by dividing the number of clicks your ad receives by the number of times your ad is shown.You will learn how to improve your targeting efforts and increase CTRs.
- Bid Management: It is imperative that you have a fundamental understanding of bid management, as you want to make sure you are not overpaying for clicks, that your ads are showing in high positions and that they are showing regularly for your keywords.
Managing your CPA can be confusing. Contact us at any time if you’d like to discuss your concerns with CPA management, and learn more about Lowering the Cost Per Click (CPC) next.