What Is CPA Marketing?
Any business owner knows that obtaining leads is the main way to achieve business growth. After all, without serving customers, your business will not be a business.
Fortunately, there are ways that help capture qualified leads and convert them into real customers. And you don't have to spend an arm and a leg to do this!
The method we are going to discuss is CPA marketing.
Knowing the basics of CPA marketing will not only give you a cost-effective way to generate more leads but will also help in understanding how well your business is doing.
In this blog, we will teach you what CPA means and how to use it to inform your decision-making when it comes to your marketing.
let's get started!
What is CPA Marketing?
CPA means cost per acquisition. This means how much it costs someone to complete the conversion program (leads, purchases, etc.)
CPA Marketing is using your CPA as of the main KPI (Key Performance Indicator) and optimizing your marketing around reducing your cost per acquisition.
Why is CPA Marketing Important?
CPA marketing is important because the lower your CPA, the less you have to spend on marketing your business, and the more money you can save your business.
We know that every business owner wants a good ROAS (Return on Advertising Expense), but to make sure you have to invest in good marketing techniques first.
The cost per acquisition below your product cost should be the goal of your business marketing strategy. This will ensure that you are seeing the highest return on your investment and ultimately set your business up for success.
Many marketing platforms have campaigns designed to achieve a fixed cost per campaign. Platforms like Google allow businesses to reach a wide range of people based on their ad rank rather than their bid.
If you have enough data and information in your ads, then you can use one of those automated campaigns very easily.
Even without data, there are ways we can show you how to get a great CPA in a few simple steps.
For example, we helped one of our customers reduce the CPA of their service-based business by 50% by changing a simple bidding setting on Google ads. As we mentioned earlier, platforms like these greatly simplify the CPA of your business.
This is because they make it easier to produce more results by changing just a few things.
On the other hand, you can also use technologies outside these platforms. Here are some simple ways by which you can systematically optimize your ads to help increase your Ad Rank and lower your CPA.
Simple Ways To Optimize Your CPA Marketing Ads
Using Marketing Funnels
We used a powerful marketing funnel, which helps nurture through the purchasing cycle for one of our eCommerce customers. The use of funnels helped us to get more qualified leads and encouraged them to convert into paying customers.
result? We were able to reduce this client's CPA by over 70%!
And this is a major deal for any business that has felt the stress of the costs it takes to acquire customers for its business.
When your ads spark your consumer's interest, they are more likely to click on it. To do this, you can create advertisements that make your audience curious about your offering without too much information.
Maybe a catchy video that leaves them with a cliff-hanger and entices them to click on it for more information.
However, you choose to spark interest with your content, make sure you communicate the benefits clearly so that your audience is eager to click and learn more.
Focus on your keyword usage
The relevance of the keyword is another important part of determining the rank of the advertisement.
When you include relevant industry keywords in your ads, search engine crawlers will notice them and rank them with high-quality scores. The higher your Quality Score, the higher your ads rank on the search engines.
This is due to the fact that search engines, such as Google, want quality content on their search engine result pages. Therefore, they favor advertisements that have high-quality scores. These ads are generally rewarded with higher rankings and lower CPA costs.
We say all this to say, the more relevant your ads are to the keywords in your industry, the better it is for your CPA.
Do not just sell the product or service
When we say don't just sell your product or service, we mean it can't be all.
To make your ads attractive to get clicks, you have to put more and more effort into "selling" your product or service. In general, no one likes to be sold. Thus, it is important to ensure that your ads not only logically appeal to your audience, but also appeal to them emotionally.
When your advertisements have the potential to develop emotional appeal, they are more likely to connect with your audience. And in return, get more clicks. This is because emotions provoke the need for more action than logic.
Therefore, when you say that your ads will perform better, this in turn will help reduce your CPA.
Create a landing page for your ads
So you have tended to click on your ads, but part of getting new customers is actually getting them to convert.
A landing page designed specifically for that advertising offer will help create these conversions. Attractive text and information should be displayed on your landing page, along with links that do not interfere with your visitor's ability to convert.
For example, design your landing page in such a way that only visitors are allowed to leave if they convert. This is just an example of what you can do but is the most important part of developing a landing page that helps convert your ads to your traffic.
Key metrics to consider before relying on CPA advertising
Has CPA Marketing Started You? Absolutely Fabulous!
However, before you decide to dive into the CPA marketing head, there are some metrics that you need to consider and understand first.
By understanding these key metrics, you can gain a deeper understanding of CPA marketing and how it will work for your business strategy.
And because we want you to rely on CPA marketing without knowing all the details first, we've listed the main metrics below that you should consider before you begin.
Platform
Some platforms have automatic CPA settings that you can use with your ads. However, automated strategies only work if there is a specific tracking code on your site, each conversion action, and enough information in your account for each platform you are using.
If you do not have enough information, you can run a non-automated test using advertising best practices.
We already mentioned Google ads because it is the most commonly used platform for CPA marketing - mainly because it is already a huge search engine. But that is not the only platform you can use. Facebook is a powerful CPA platform that you can use to run your automated ads, but we'll get there in a moment.
Google has a specific automated bidding strategy known as "Target CPA". It uses historical data from your account and other data points to optimize your bid. This sets a sufficient bid to reach your target CPA.
Suppose you are a multivitamin selling business. You want to target your average CPA of $ 5. You want to use the key phrase "best multivitamin", but it causes a problem.
The key phrase "best multivitamin" has an average CPC (price per click) of $ 5.40. You can say to yourself "40 cents is not that much," but you need to keep in mind that even after clicking 100% on your ad, you are still $ .40 at your target CPA.
This means that Google has not shown your ads. And it's really bad if you spent all that money trying to increase your visibility by populating Google.
Google's Target CPA bidding strategy works most efficiently when you already have data in your account. That being said, we recommend that you have an absolute minimum allowance of 15 conversions or purchases over a 30-day period before starting Google Target AAA.
Facebook, on the other hand, works quite differently.
What is CPA Facebook?
Facebook ads use the "cost cap" capability. This means that you are able to set the maximum amount on any conversion action and it will spend that amount.
Similar to Google's Target CPA strategy, it pulls data from your Facebook account and other data points to optimize the delivery of your ads.
When it comes to maximizing your bidding on your ads, Google Ads allows a little too vague room. On the other hand, there is no Facebook advertisement. The maximum you set is as far as you can go and does not exceed.
But for Facebook, we recommend having a little more information in your account before running ads. For Facebook, we recommend having 50 conversions in 7 days to be able to effectively optimize CPA.
This seems like a long order but it's not really when you remember that conversions don't always have to be bought.
The type of conversion you set depends on your audience, which is the next metric to consider.
Split Your Audience
We talked a little bit about how we helped one of our customers use a marketing funnel to lower their CPA, but the main thing is that it is much less likely that anyone Knowing the business will automatically buy from you.
The whole process of this is actually, which we explain in-depth about the importance of marketing funnel in our blog.
Needless to say, it is important that there is not only one CPA goal but several smaller CPAs that get someone to accomplish specific tasks.
CPAs must be specified at each stage of the customer journey to help track conversions along the process. All your CPAs should be less expensive than the target.
When you are advertising, you should break your campaign into different audiences with your own budget and target CPA.
But before we dive any deeper, we know that CPA is a "law of averages". This means that we also have to address the relation between conversion rates and CPAs, which are hands-on.
The conversion rate is the percentage of people who convert on your page.
Let's look at another example.
Imagine that you are a photography studio that sends Facebook traffic campaigns to your website. If you get 100 people on your site and 10 of them sign-up for email, or in this case, convert, your conversion rate will be 10%.
You spent $ 30 to acquire these 10 email subscribers. This means that your CPA for this part of the customer journey is $ 3.
Now, you can develop a strategy that allows you to determine how much you need to spend to reach your goal of maybe 100 email subscribers.
With this goal, you have to bring 1,000 people to your site and it will cost you around $ 300. As you can see, knowing your CPA and conversion rate will help you know how much you can spend on your ads and how much budget.
Reminder: Cold viewers are always going to have a higher CPA than warm or hot viewers. Therefore, be sure to segment your audience accordingly, and provide a proper CPA for each ad group/ad set.
Finding out whether your audience is receiving your ads well or whether your automation is working can be determined by looking at your frequency.
The frequency
Frequency is the number of times people see your ads.
If the algorithm does not have enough information or your target CPA is too small, it will continuously submit your ads to the cheapest people at the cheapest time.
A high frequency with a low click-through rate means that your audience is very small. Your CPA is going to be very high on improvised platforms like Facebook.
When this happens, it is best to close those ads and take a look at them. Maybe remove high-cost locations, or if you're running more than one ad at a time, turn off those with high CPA. This will help you reduce your CPA.
The conclusion
CPA marketing is an excellent tool to maintain your margin and revenue. (All you have to do is)When used correctly,
Use automated strategies if applicable
Segment your audience types
And keep an eye on that frequency.
If you do all of that, CPA marketing will help you reduce your cost per acquisition. This is true because we can reduce the cost per acquisition of a service-based business by 50% using these same methods.
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