Cost Per Acquisition (CPA)- How Can I Lower it? Marketing in business involves a wide range of different tasks.
Although generally the end aim is more or less the same – to raise brand awareness and sell your product or service – the way that this is done varies greatly.
Some of the top ways companies invest in marketing include online marketing, networking, blogging and writing copy and advertising.
Advertising normally refers to the different advertisements you see across websites, social network platforms and even Google. However, advertising can also refer to text-based copy that includes links.
In terms of advertising, sharing ad copy in the hope that prospective clients will click through to your site, things like CPA and CPC are important metrics.
CPA refers to Cost per Acquisition, whereas CPC refers to Cost Per Click. Both, as a whole, are related to the price of the clicks you get on your advertisements.
It might sound confusing, but in the long run, CPA in particular is a really important thing to measure in your marketing campaigns. It’s a great way to measure success (or lack thereof) and work out what is and isn’t working with your campaign.
Firstly, let’s delve into what CPA is.
What is Cost Per Acquisition?
As explained before, CPA is related to the price of the clicks you get on your advertisements.
However, CPA, also known as Cost Per Action, doesn’t rely on simply clicks. It relies on actions taken. These include clicking the advertisement and purchasing your product, signing up for a newsletter, watching a video or even submitting a form.
For example, if you offer SEO services and the option of potential customers booking a demo call with your business. You may advertise on Google and, a customer looking for SEO help, will click on your banner. If the customer then logs onto your website and books a discovery call through a form submission, this is considered as an action – or CPA.
Therefore, the metrics are, in a way, a lot more in-depth. You’ll actually be paying for not just clicks, but action taken too, like any call to action participated in on your website.
Another way to look at it is simply how much you’ll be paying to bring in a new customer!
What is The Difference Between Cost Per Acquisition and Cost Per Click?
Basically, Cost Per Click refers to – yep, you guessed it – the cost of each click on your ad. So in this case, any action taken after isn’t taken into account – just the click.
In some ways, this is more beneficial as in this case, you will only get charged for clicks. So, for example, if a customer sees your advertisement or Google AdWords but doesn’t click on it, you won’t get charged. You may still then benefit from thousands of free impressions or views.
It’s important to remember that Cost Per Acquisition may end up costing more than CPC, as a user may click on your link but not purchase anything afterwards. Therefore, you’ve paid for that link click but not received a sale from it.
Each campaign offers its own benefits and challenges, and many people explore using both methods when running a marketing campaign.
Why Lower CPA Rate?
It makes sense that you’d want to lower your average Cost Per Acquisition or CPA rate. After all, who doesn’t want to save money whilst also making sales?
Most marketing teams will aim to get a lower CPA on Google AdWords and similar platforms because, as we explained above, you don’t want to spend lots of money on clicks that don’t go anywhere.
You’ll also find the lower your CPA, the better your marketing campaign is going. Overall, it’s a great way to see what is and isn’t working. For example, you might end up with a really low CPA in regards to email newsletter signups, but a really high one when it comes to actually purchasing products.
This can tell you many things like focusing your marketing efforts elsewhere. Maybe you should focus on strategies in line with newsletter signups and before your product page. You could even offer a discount code when people sign up, which will then encourage them to complete the sales process and spend money!
Lowering CPA can also increase your ROI (Return on Investment) in a relatively short period of time too.
How Can I Lower My Cost Per Acquisition/Cost Per Action?
Let’s get to the good stuff: how to lower CPA rate! As always, different methods work for different companies, but these general tips you should always keep in mind.
- Improve your quality score
This is especially important with Google Ads as it directly refers to Google’s rating for your ads. Not to be confused with quality score for SEO or keywords, Google’s Quality score means the score of your actual ads. Think using relevant keywords, enhancing user experience etc. This all helps with quality score overall.
- Optimise your landing page
When a user clicks on your ad, make sure the page they are taken to is up to scratch. Make sure it’s informative, full of keywords, clear to read and easy on the eyes. Don’t forget to make sure it includes a call to action too and that there are no technical issues. If a user comes across technical issues immediately, that’s a fast way to lose a potential paying customer.
- Analyse the settings of your paid campaigns
It’s an obvious one, but many new businesses don’t pay much attention to this part. Optimise things like location, target, advertising platform and devices etc. You should also keep these in mind for your target audience: for example, if you’re aiming to reach an age group of 60/70+, they’re unlikely to be looking at mobile ads or using mobile devices. Alternatively, a younger audience may use mobile devices more than anything else, so make sure your ads are clear on mobile devices as well as other devices or various browsers and mobile browsers.
- Don’t forget about retargeting users that click on your ad or link and don’t take action..
.especially as this is wasted money when it comes to CPA! If a user goes to purchase something but abandons the checkout process before payment, you can easily re-target them with discount codes or other offers to make them convert into a paying customer. Keep those conversion rates in mind in regards to cart abandonment rate! Retargeting can make a huge difference.
Other Things to Keep in Mind with Your Marketing Efforts
- Know your differences between CPA, CPC and more
It may sound confusing at first, especially to a new business, but knowing the difference between marketing campaigns will do wonders for your marketing budget in the long run. Things like Cost Per Conversion, Cost Per Mile and Click Through Rate are also a vital measurement in campaigns. And to make things even more confusing, some have different variations! For example, Cost Per Acquisition and Cost Per Action are exactly the same thing!
- Spend money to save money
As any business will know, a lot of the time you have to spend money to save money – especially in the earlier years of business. It’s definitely worth investing in tools like Data Dive or LinkedIn Ads to help with your marketing efforts, even if you don’t see huge results instantly. Persevere long-term and have faith when you invest money/advertising spend into your business. From a business perspective, many business owners are already well aware of this, no matter what business stage they’re at.
- Google is your friend
Even if you don’t use Google AdWords at first, it’s still worth looking into. It’s not just an advertising platform, it’s also a key driver in most marketing campaigns. Google is a great platform for blogs, marketing and advertising, and also offers fantastic resources and tools to learn more. Take a look at Google Search Platform or Google Analytics for further learning about keywords and marketing. Google Analytics may look overwhelming at first, but stick at it. Google also has Google Analytics Academy – which is free – and can teach you more about, well, Google Analytics.
- Social Media Content Marketing
Even if you’ve got a limited marketing budget, keep social media content marketing in mind. This is especially useful for online businesses. Focusing on raising brand awareness can lead to sales and can be a great impact of marketing. Different marketing mediums can all add up to a great marketing ROI that doesn’t necessarily involve direct advertising costs. Online businesses can often go far by just using social media alone!
- Use tools like Data Dive
Data Dive is extremely useful for marketing teams and marketing metrics, as it can be used alongside any marketing campaigns. Data Dive will help you target the right high-quality leads and save you time and money in the process.
To sum up, CPA is similar to CPC but can have a very different impact based on click, user experience and any actions taken by customers. Just like CPC, it’s beneficial to aim for a low CPA rate to make more sales and lower your advertising cost.
Once you completely understand CPA and its benefits, you’ll be able to use it successfully in your internal campaigns and as an online advertising medium. Campaign success – and secondary campaigns – are often reliant on things like CPA, CPC and more, so it’s best to get your head around it as soon as possible.
No matter what your ecommerce goals are or what business stage you’re at, this variety of methods will help you lower your CPA rate and advertising money too. Just keep in mind things like user experience (i.ie no technical issues), retargeting users, quality score and outsourcing for helpful tools and you’ll see a difference.
Just remember to be patient, as changes won’t happen overnight. You should remember to analyse your efforts often, and the growth stage of your campaigns in the meantime. Your optimisation efforts won’t be in vain in turning even a single customer into qualified leads or online shoppers.