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What’s A Good Cost Per Acquisition (CPA)? Ask The PPC

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What’s A Good Cost Per Acquisition (CPA)? Ask The PPC #Whats #Good #Cost #Acquisition #CPA #PPC Welcome to TmZ Blog, here is the new story we have for you today:



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It can be really tough to come up with paid media KPIs and their correlating budgets.

The most important factor is understanding what a customer is worth and how many leads you need to yield a customer.

This month’s Ask The PPC question asks us to explore how we come up with costs per acquisition (CPAs) and how to use them to create a campaign budget/strategy. Galle asks:

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“In PPC, is there a correlation between actual value of the product/service and CPA?

If so, how can one use this insight when planning the campaign budget.

Cheers!”

In short, what is a good CPA? Let’s take a look.

The Correlation Between Customer Value + CPA

All paid media campaigns function off an auction.

Based on the competitiveness of an idea (search term or target audience), you may be forced to pay a premium or get discounts.

Different products and services have different auction prices.

For example, the legal industry has some of the most expensive costs per click (CPCs), which correlates to the cost of services.

The average personal injury case is worth around $5,000 to $6,000 to the firm, so paying $200 to $400 per click can still achieve positive ROI.

If the conversion rate is good (35%-40%), it’s reasonable to expect a $600 to $700 CPA on a $20,000 spend. Given this scenario, the ROAS (return on ad spend) would be 8.34x.

This would be an all-star account.

Most conversion rates will be closer to 10%-25% (i.e., the sale/deal happened).

Setting realistic expectations for CPAs and ROAS directly influences the success of campaigns.

If there isn’t budget to get enough clicks in the day, the campaign won’t be able to deliver results or get out of the learning period.

Be sure you’re factoring in customer lifetime value into your CPA and ROA goals.

If you sell a $15 product that invites a monthly subscription, be sure you’re considering the average lifetime of the customer.

An annual customer would be worth $180 and allows for a higher CPA.

What Is A Good CPA?

A good CPA (cost per acquisition) will bring in customers at a profitable price while remaining competitive enough to keep the brand in high-value auctions.

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