Why Cost Per Acquisition Is a Better Metric Than Cost Per Click

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November 28, 2017
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Cost Per Acquisition

Why Cost Per Acquisition (CPA) Is a Better Metric Than Cost Per Click (CPC)

An Ad person cannot be considered as a good ad person if they can’t show it in numbers, at UIZ we only deal with results which we can represent in numbers. So, an effective marketer has to be monitoring the performance in terms of numbers of the conversion metrics such as Click-thru-rate, cost per click (CPC), cost per conversion and the best metric that matters a lot is the “Cost per acquisition (CPA)”.

CPA in simple words can be defined as the amount of money you have to spend on marketing to get a paying customer.

The reason why CPA is a very important conversion is that it is the ideal metric for determining the true and more accurate return on the investment you have put in. Just paying for so many clicks or eyeballs for a campaign without receiving a paying customer means nothing to benefit you with success.

Experienced Case study

Shared experience from a relevant case study; we were working on managing a company’s PPC account. The Ads were highly performing and well above the average and on top of that we managed to achieve a CTR of 5% but lowered the CPC to less than one dollar; outstanding statistics. But when sharing this good news with our client, was not so convincing as we found out that they had only two sales as a result of the efforts we had put in the project. Their CPA was not well defined and it was the entire spend on the market which is not impressive. From then, we had to shift our focus from CTRs and CPC to CPA which was just the right move to drive sales even though the click rates weren’t high as they were, but more effective.

CPC vs CPA

CPC vs CPA

CPC vs CPA

These two conversion metrics are not the same as they don’t represent the same meaning. The conversion has a wide meaning from making purchases to just like the product or brand on Instagram or Facebook. The acquisition, however, is completely centered on making a customer.

CPC is needed to answer the question, “How much does it cost to get this Ad subscription?” but you should not rule out the more important which is, “How many Ad subscriptions do I need on average to make a sale?” CPA provides an answer to this question.

How to define your CPA

CPA can be defined in many ways – this is the same as saying – there are many ways to define your average revenue per customer, and the way to do this is to calculate your total revenue in a month or a year depending on what works better for you and divide by the number of customers you had in the that period.

The average revenue per customer is what tells you how much you have to be spending to get a customer and that way it answers the most common which we get from our customers, “How much should we spend to get a new client? For more accurate numbers, taking the average over a longer period is better than a shorter period, therefore, calculation of total revenue and number of customers over a year than a month.

 

UIZ is a company which provides you with the effective service on basis of CPA along with other metrics for better results. To make contact with us please call us through  +49-30-20679114

UIZ
UIZ

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