When you are going to make ads, the price to pay depends on three methods, one of them is the Cost Per Acquisition, also known as CPA in digital marketing.
The charging methods used by the platforms respond to the type of interaction that the ad is going to have, and therefore the metric with which its effectiveness will be measured.
The CPA in digital marketing is just one of the ways you can set up your ad, but you can also use the CPA and CPM (Cost per click) CPC (Cost per Click) and CPM (Cost per thousand impressions). Today we will only focus on CPA.
How does CPA work in digital marketing?
The Cost Per Acquisition (CPA) is the most expensive option to pay for an ad, but it is very effective, because you pay only when the objective of your campaign has been achieved: to sell, achieve a subscription, download a material, among others.
Basically, the CPA can be calculated using a formula, which will give you as a result that “average” that you will read to know its effectiveness.
The CPA is well known for being low risk for those who pay, so the investment is worth it, remember that, if you have a very specific goal, until the expected action is not achieved, you will not pay with it. The interaction with the ad is what will determine the amount to invest.
It is best to bet on CPA when you already have a profit margin. As you grow with your brand, this will result in your audience trusting you more, making the convening power and interaction with your ads greater, therefore, the price to pay will be higher and equivalent to the recognition you have. If you do not yet have enough money to invest, wait a little so you can cover a greater demand and dissemination of your ad.
The CPA in digital marketing has been well received because it allows companies and brands to have an exponential growth, while receiving a fair investment according to the actions recorded by users, generating a good average sale of services / products.
The CPA in marketing is also known as Cost per Action
CPA as an indicator
Taking into account what we have just explained, it is possible that the CPA becomes a management indicator or KPI. Every sales or digital marketing area must have knowledge of how it works and how the average is obtained.
Let’s give you an example, imagine that you invested 3000$ in your ads, and you got 50 subscriptions to your service. To know your CPA, you just have to make a common division.
Total invested: 3000 $ / Number of conversions: 50
CPA: 60
How can you improve your CPA?
If you are working on Google Adwords, you must take into account several aspects for your campaign to be effective and for your CPA to have good results.
Remember that the advertiser pays only if the campaign is effective and purchases, affiliations or any other type of expected action are registered, therefore, depending on how you work your CPA the reach will be greater, be sure to configure your campaign well
- In terms of metrics, the quality of your ad will influence, but also the way it is indexed in Google, in terms of landing pages, ads and keywords.
- There is a particularity to take into account and it is that the costs will be lower as long as your ad has excellent quality. If you have a quality score higher than 5, which is the average, your CPA can be 16% lower.
- We recommend you to be very attentive to the three metrics: CPM, CPC and CPA will allow you to have more control of your budget and your results. This way you can know if it has worked, if you can improve your ads, you can improve your exposure and invest more, optimize your conversions will allow you to make better use of your money and get more customers, which translates into more sales.
- Don’t forget that each payment method has different prices, objectives and formulas, but also the results vary according to the one you choose. To know which one is right for you, evaluate your budget and your needs, so you will know which one to choose.
- Choose the right channels, right where your audience is, this will help you get more views, so your results will be much more favorable.