CPA o cost per acquisition is the price that an e-commerce pays for online publicity with the end achieving a conversion, whether it is a lead or a sale. It is a form of paying for online advertisements where the advertiser only pays when an acquisition is produced, so that its cost effectiveness is better than that of other publication forms. This type of payment can apply to both Google Ads and social media publicity. So that the advertisements are effective, you should check that the CPA is lower than the profit margin. You can make an anterior estimation based on your pricing policy to determine where you can ascent your CPA.
For this, should know from the start that CPA is calculated by dividing the total investment in the campaign by the number of obtained acquisitions. The difference with CAC or Cost of Client Acquisition is that the latter refers to the money invested in the achievement of a sale, while in CPA we talk about any type of conversion, whether it is a click, the registration of a form, or downloading a report.
Advantages of knowing the CPA of your campaigns
The principal advantage of campaigns with CPA is that you only pay in the case of an acquisition, so the ROI will be greater. More so if you manage to close a sale. At the same time, it is a less intrusive modality of publicity given that you can combine different calls to action to attract the user, more so than the traditional “buy now”.
To add to this, CPA is a key metric in finding out the effectiveness of your campaign. You can include it in your KIPs to facilitate decision making and improve your conversion rate on average and in the long term. Furthermore, this information will allow you to reduce the cost of acquisition of future publication actions. If at this time you apply the following tips, you will be able to fine tune your campaigns, little by little, to increase your profit margin.
Advice to reduce the CPA of your e-commerce
Improve the quality of your advertisement
The better the equality of your advertisement, the less your CPA will be. For example, in Google Ads, if your advertisement is above the average quality of 5, your CPA will be reduced by approximately 16%. The quality is measured based on the selected key words and the landing pages of redirection for the user. You can start by making bid adjustments based on the CPA by the key word and extending the listed negative words. If you have doubts, you can also start A/B tests to check if the advertisement works better.
On you part, the landing page should be simple and convincing, a page that contributes value and transmits clear and direct messages. As resources to maintain user attention, you can include videos or animations that awaken the interest and eliminate the outbound links to avoid their attention deviating.
Provide interesting content to your advertisement
On the other hand, the more effective an advertisement is, the lower the CPA, to obtain a greater number of acquisitions. Since potential clients are exposed to hundreds of advertisements every day, you should look for a way to call their attention with interesting content. For this you can:
- Generate curiosity and intrigue
- Appeal to emotions
- Create a connection with users
- Employ visuals resources that stand out
Thanks to the campaign performance that the majority of platforms provide in real time, you can verify if there are hours or days in the week that the conversion rate increases or decreases notably and adapting visibility in your advertisement based on that. The final objective will be to identify a pattern of behavior common to different ads.
Because of their characteristics, advertisements with CPA offer the opportunities to start dynamic pricing campaigns that reach different targets. With a good segmentation of audiences and automated tools you can adjust prices both to user expectations and to the changes of the market. All of this with the security that, if a price is not sufficiently attractive and does not generate conversion, you will not have to pay for the advertisement.