The cost per action (CPA) – occasionally abbreviated as cost per acquisition, is a marketing benchmark that evaluates the overall amount of gaining a paid client in terms of promotions. In everything we do, we approach marketing with a data-driven perspective. When optimizing campaigns, we use data and analytics to make educated and informed decisions. It’s a winning strategy that works. In other words, how much of your marketing budget would it take to secure a paying customer? By using the principle, CPA = cost/conversions to calculate your CPA. Increasing your return on investment (ROI) in a short period can be accomplished by lowering the cost of acquiring visitors. By reducing the need to acquire new clients, costs can be kept under control right from the beginning.
Sales and visitor generation are often more important to marketers than cost optimization. Typically, they start a project by thinking about how they can generate more revenue, ignoring cost optimization until a substantial amount of resources have been spent.
It’s easier to limit costs now than to find ways to increase conversions, so lowering CPA from the beginning is like picking low-hanging fruit. Generally, it’s better (and faster) to reduce marketing and conversion costs before sales statistics begin rolling in. Since “search engine marketing” is now widely recognized as one of the most successful methods of reaching a specific demographic, cutting CPA has never been more important.
With Google Adwords, you can expect to get $1 back for every $2 spent. Regardless of whether you are or not, you should read on. As part of this post, we’ll examine the relevance of CPA in AdWords ads, as well as specific, tried-and-true tactics to lower your CPA and increase your ROI.
The CPA metric: An overview
What is CPA? This is what Google defines as CPA:
“The amount paid by advertisers for each new client, which is determined by dividing the total conversion cost by the number of conversions. The CPA is calculated by Google based on your quality score.”
Doesn’t that seem straightforward? When you add Target CPA bidding to the mix, things can seem rather confusing. Those topics will be discussed later, but for now, let’s focus on how to calculate and use this crucial metric.
Cost per acquisition (CPA) is an important metric used to measure the effectiveness of marketing campaigns. The lower the metric, the better the return on your PPC investment. The cost per acquisition is lower, generating more leads and revenues. In contrast, average CPAs vary greatly based on industry. For example, retail eCommerce CPAs can cost as low as $46 per click, while the average cost per click for a law firm is $200.
The value of a conversion is very different, so the market cost per click plays a big role and also a customer’s lifetime value too. Maintaining certain things acceptable while focusing on lower CPAs needs to realise that not every click will result in a paying customer.
How does your CPA differ based on other factors? Google Ads managers usually ignore the second sentence in Google’s description of CPA when aiming to reduce CPA. What is it exactly, you may wonder? The key to a good score is quality.
How Does Quality Affect CPA?
Few people realize that the Quality Score also affects the cost per acquisition of your keywords in Google Ads management, but it does. If your Google Ads campaigns have a higher quality score, you can improve conversions and reduce your cost per acquisition (CPA). Both optimizing for CPA and quality score are essentially the same. So you can save a lot of money on CPA if your keyword quality score is better than 5.
The keynote is that if your quality score is below average, your CPA will rise in parallel to your rivals, which leads to lowering your ROI.
Effective CPA Reduction Strategies
Here are a few excellent practices you can use to reduce your acquisition expenses while using PPC advertising.
- Make Your Landing Page More Effective
Landing pages play a significant role in overall conversions as they are the first web pages visitors see after clicking on your ad. You may want to conduct an A/B test when evaluating the performance of your landing page to determine whether you should modify a particular attribute.
The purpose of a landing page Test A, regardless of the type of ad you run, can be to route all traffic to the same generic page. Test B, on the other hand, can be used in a more targeted and specialised way.
Divide the traffic between the two landing pages 50/50 and run both at the same time, then examine the results. Over time, you will be able to determine which landing page will increase conversion rates and lower CPA.
- Leverage the power of online video
Video content is one of the most effective for driving engagement and ROI. Adobe found that 51.9% of marketing experts around the world believe video has the best return on investment. Furthermore, video searches are usually less competitive than other forms of search. YouTube can help you lower your CPA by targeting all your highly competitive search terms.
In conjunction with other search efforts, this can be used to dominate most searches with the least amount of competition. Keywords, gender, target audience, geography, and other factors can all be used to narrow YouTube searches.
- Make use of retargeting tactics.
In retargeting, or remarking, your website is advertised to past visitors by displaying relevant ads on other Google Display Network sites. If you show potential leads advertising while they are browsing other websites, they may return to your site and hopefully become a paying customer.
Using retargeting, you add a piece of code to your website called a retargeting tag. Website visitors are tagged and added to your retargeting list. It’s simply a list of hot prospects you can approach later with a convincing offer. The use of retargeting strategies can be extremely helpful, and they will undoubtedly increase conversion rates and reduce acquisition costs.
- Do not target locations that produce little to no sales
Pareto’s principle is generally applicable, so this is not an exception. In this example, 20% of the sales come from 20% of the locations, while the remaining 20% come from the remaining 80%. You should also focus your spending and marketing efforts on regions, primarily cities, that are more likely to generate sales.
When your revenue becomes more liquid or you have more budget to spare, you might want to consider returning to these no-sale zones to capture a larger share of the pie on your sales chart.
- Examine your keyword list
There are lots of methods to lower your CPA here, the foremost part is Keywords which are the main kickstart of most of the accounts. When you have less than 5 then pause right there without any doubt.
To sort your keywords by score, make sure the Quality Score column is enabled in your campaign. If something isn’t performing well, hit the pause button. As a result, your budget won’t be eaten up by these poor-performing keywords but will instead go to your high-performing ones. We recommend pausing them rather than deleting them to keep your account data.
Reduce your keyword bids if you’re using Enhanced CPC campaigns, which are non-automated bidding models. Consider your existing ad positions, your target ad spends, and whether your campaign is budget-constrained when lowering your keyword bids.
In most audits, we see no negative terms used. Add the irrelevant search queries as negative terms in your campaign’s keywords > search queries to filter them out. Negative keywords that match phrases or exact matches are the best way to avoid being too restricted on searches. Using the Google Search Terms report, you can double-check if your keyword match types are generating searches. Use exact match keywords for search queries that convert well.
- Ad structures should be clean to boost the quality score.
As we discussed, quality scores can help you increase your CPA, but how do you raise the quality score for your keywords? Ultimately, it comes down to the relevance of the search, or whether the landing page matches the search query.
During our marketing audits, we often see ads that just link to the site. If you are looking for individual products or services, this may not work for brand keywords. The landing page should be of high quality, not just an article from a random blog. You should imagine yourself as your end customer and work backwards.
Campaign managers frequently overlook the need for clear campaign ad frameworks. Ensure your ad groups contain relevant keywords and aren’t overburdened with random variations. Increasing your click-through rate will help you improve your quality score. The ESKAG (Exact Single Keyword Ad Group) structure allows marketers to target only a single high-performing keyword per ad group. You may be able to lower your cost per acquisition if you focus your budget on the most effective search terms.
- The timely placement of ads is crucial.
Are your ads appearing at the most opportune time? Are they using your budget when you aren’t even open? It may seem like a simple setting but is often overlooked. Ad scheduling allows advertisers to determine the optimal time for their ads to appear in search results, so they can personalize their ads. When the data accumulates, it can be used as a reference to determine the best time to bid on the hour and day. Changing your ad scheduling will result in fewer clicks and impressions, possibly lowering your conversion rate.
- Utilize long-tail keywords
The keywords you are bidding on are one of the first things you should consider when trying to reduce your cost per click. Long-tail keywords are phrases with four or more words.
If you haven’t already, you should be bidding on long-tail keywords in your account. Why? Long-tail keywords, on the other hand, are less competitive since there are fewer searches. As a result, they are typically much less expensive than longer, broader keywords. The disadvantage is that fewer people will visit your website. On the other hand, long-tail keywords tend to provide more visibility. They’re also more targeted, which increases your conversion rate.
Find long-tail keywords with these 3 methods
PPC campaigns can benefit from targeting long-tail keywords, which can be found through several tools.
- Google Adwords Keyword Planner is the most straightforward tool. The projected average CPA will be mapped to any keywords you find.
- To improve your search on Google, you can use a tool like Search Terms Report suggestions.
- Another option is to use Google. When you type a keyword into Google’s search bar, a drop-down menu will appear with suggestions. Google Adwords Keyword Planner can be used to estimate the expected search volume and CPA.
- Ads on Mobile Devices Should Be Optimized
A mobile-optimized ad improves the user experience when viewed and interacted with on a mobile device. A variety of reasons exist why it shouldn’t interfere with the user experience. It’s not enough that an advertisement can be viewed on a mobile device to mean it’s mobile-friendly.
Are you sure your ostensibly mobile-friendly ad will not degrade the user experience rather than improve it? Conversion rates should be monitored.
When did you start running mobile ads? A mobile-friendly website is mobile-friendly. You can improve your chances of success by creating a mobile ad that not only renders correctly in the mobile browser but also enhances the purchasing experience on a mobile device.
- Make a big effort to grow your email list.
The one marketing strategy that consistently delivers results is email marketing, which may be old school but is still highly effective. Comparatively to other more sophisticated or high-tech marketing channels available today, it offers the best return on investment (3800%) and the lowest cost per acquisition.
You would be making a mistake if you didn’t take advantage of this cost-effective marketing strategy. At the very least, gather their email addresses when collecting information from website visitors. By having a large email list, you can rent ad platforms like Google, Facebook, and other social media platforms for a smaller amount of money.
Machine Learning – What is Cost Per Acquisition Bidding?
CPA bidding vs. target bidding- CPA is an automated Google Ads bidding strategy that allows you to manage your advertising costs. CPA bidding differs from CPC bidding, in which you have to pay Google each time someone clicks on your advertisement since you only pay Google when someone converts. If you create a campaign, you can select your metric. Conversion actions include phone calls, sales, leads, content downloads, or checkouts.
With this method, you can focus your advertising budget on generating leads and only pay if a searcher engages with the ad and converts. In addition, it helps remove unwanted traffic. As a result, it cannot be used for Google Ads right away, since it requires a lot of conversion data to function properly.
Using Google Ads, it is possible to lower the acquisition expenses for leads and sales. The challenge is simply to recognize the data that may be used, to comprehend the end-user, and to focus on the search intent. Optimising your ad targeting can result in rapid results.
There is no one-size-fits-all solution for lowering acquisition costs, as you are aware. Some of the suggestions above may be useful to you, while others may not. It all depends on your situation, whether you have industry peculiarities that do not apply to others or exceptional circumstances that are unique to your company.
By continuously testing, monitoring, evaluating, and optimizing, profits can be substantially increased while acquisition costs can be greatly lowered. With the right mix of strategies, you can create quality leads faster than ever before or you can find your perfect PPC agency partner, who can help you lower the CPA struggles.