Cost Per Action (CPA) - Learn About Cost Per Acquisition Marketing
Cost per action (CPA) or cost per aquisition is a method of paying for advertising that allows you to pay for each conversion (sale, lead, download, etc.) as opposed to each time a searcher sees or clicks (as with CPC) on your ad. In this tutorial you'll learn:
- A more in-depth definition of cost per action.
- The importance of cost per action to your pay-per-click marketing efforts.
- The best way to implement pay-per-action bidding into your PPC campaigns.
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So What Is Cost Per Action, Anyway?
Cost per action is a means of controlling advertising spend. If you want to be sure that you're not indiscriminately spending money on terms that aren't driving business, CPA offers an opportunity to control ROI.
The Importance Of Cost Per Action Bidding
Cost per action is an important bidding option if you're looking to ensure that your campaigns receive the optimized number of conversions in exchange for your advertising spend.
There are a few ways to do this:
- By Hand - You can determine what you'd like to set as your targeted CPA, and raise and lower bids yourself to attempt to reach that goal (typically lowering bids on terms that are converting at over the average conversion cost, and raising bids that are converting for less than your targeted conversion cost).
- Paid Tools & Services - There are a number of paid bid management services which automate the process of adjusting bids to reach a target CPA.
- Google's Free Tool - Google offers a free conversion optimization service to accounts that qualify.
Designating Cost Per Action With Google Conversion Optimizer
When Should You Be Implementing The Google Cost Per Acquisition Tool?
There are a pair of signals that should point you in the direction of turning on Google's conversion optimizer:
- You Qualify - Obviously you need to have the option to use the conversion optimizer. Google requires that:
- You have AdWords conversion tracking enabled.
- The ad campaign in question must have received at least 100 conversions in the last 30 days.
- And your campaign must see conversions at a "similar rate" within the few days preceding the tool's implementation.
- You've Specified a Conversion Value - Generally speaking you'll want to have in mind a value for the action you're creating a CPA for (sales are worth x, so I'm willing to spend y for each of them).
- You Want to Avoid Managing Bids - Raising and lowering maximum bids can be a labor-intensive practice. This option allows you to set a campaign-wide CPA, and allow Google to optimize your bids to try to reach that goal.
Want The Best Cost Per Action Marketing Solution?
An even better solution than simply setting a preferred CPA is to adhere to best practices so that you:
And ultimately, lower your PPC costs.
WordStream offers sophisticated Quality Score management solutions and online marketing services that help you to implement these best practices in a fraction of the time. Find out for yourself by: