CPA or cost-per-acquisition is the amount you spent to record a conversion. For example, if your CPA is equal to € 15 it means that you have spent € 15 on advertising to make a sale. We also talk about cost per conversion. What is the cost per acquisition? How to calculate and optimize it?
What is the CPA for?
The CPA allows you to control your profitability. If you establish the target unit average margin of your products then you can estimate the amount you are willing to pay for a conversion. It is important to define a target cost per acquisition bidding before setting up your campaigns in order to have an order of magnitude of the goal to reach. For example, it will not be interesting to have an acquisition cost of 10 € if the margin on your product is only 5 €.
It also measures the effectiveness of your campaigns, when you make optimizations, usually the CPA is immediately influenced. The cost per conversion is strongly related to the conversion rate, which judges the effectiveness of your campaigns.
CPA calculation formula: cost / conversion
Attention: it’s up to you to define what you consider to be a conversion, it can be a sale as it can also be a quote request. Smartly place your conversion code on the most relevant page (order confirmation, thank you quote …). Perform a conversion test to verify that it is working properly.
How to optimize its cost per conversion on Adwords?
– Refer users to the products they are looking for: this means a good organization of your campaigns and keywords as well as your ads and landing pages . This is an important goal of Google Adwords.
– Optimize the product sheets: do not hesitate to offer additional products or similar on your product sheets so that the user can have the choice.
– Optimize your CPCs: you do not have to be in 1st position to convert. Do not hesitate to aim for lower seats, between 2 and 3, to lower your costs and study the evolution of your conversions.
– Use the Adwords conversion optimizer: it is a tool offered by the platform of Google, it can be activated after a certain time of activity of your campaigns because it is based on the conversion history. To configure it you will not have to select a target CPA, Google will recommend one but you can indicate the one you want.
What to retain Cost By Acquisition?
This is an important measure to judge the effectiveness of your Google Adwords campaigns. It measures the amount of expense necessary to record a conversion. So you have to think carefully before setting a target CPA, taking into account the profitability of the products you sell. Optimizing your cost per conversion will logically increase the profitability of your Adwords campaigns, so it may be worth looking into!