Module 6 - Know your CPA

What is CPA and how does it differ from other metrics?

CPA stands for cost per acquisition, and it looks specifically at the cost per sale, rather than cost per conversion, cost per phone call, cost per page view or cost per video view.

For example, if you were promoting a webinar and it took ten people to get one sale from the webinar, you would ignore those ten people and just divide the amount spent by that one sale. It is not a complicated formula. If you spent [figure unclear] and you got two sales, it would be 50 pounds cost per acquisition.

Google can use this as a target, and you can set your own metrics that you want to use for your CPAs.

Should you measure CPA broadly or per campaign?

Either, and it can be as broad or as narrow as you want it to be. If it is broad, you do a general cost per acquisition for all of your campaigns and all of your efforts over whatever time period. If it is narrow, it can be as specific as per campaign.

The pro of doing it narrow is that you can quickly see which of the campaigns are working best for you. That might not necessarily be the ones getting the cheapest leads, because if you are going for quality over quantity, even if you spend an extra few quid for a lead and it gets more sales, you want to focus on where the sales are coming from.

The con is that if you do not have the cost per conversion and all of the other metrics alongside this, it might not be as clear to you what is working.

How do you actually work it out?

Total spend divided by total customers, not leads. Google can do this for you, and if you set up your conversions right, and I am sure that will be covered in another video, it can work it out for you almost instantly. If you do not end up setting it up like that, it is an easy calculation to make.

Let me show you one of the accounts we are working on. This might be confusing for you, because there will not be as many campaigns in your account. What you can see is that if you set up your conversions to track both leads and sales, then click on segment at the top, go on conversions and then on conversion actions, you can see the specific conversions that have been tracked.

If you look at this remarketing campaign, you can see that we have spent 40 pounds and there have been five add to carts and two sales. So the easy calculation is 40 divided by two, which is 20 pounds per sale. I think this was for a 300 pound product, so the remarketing is great.

You can choose to use the five add to carts in your calculations as well, but I would not. Keep it nice and simple: 40 pounds divided by two. If that cost per sale, or cost per acquisition, is less than your profit margin, then you are good to go.

If you have any questions about this, please let me know. My email is at the end here, at s.media, and I hope this helps.