Measuring campaign performance is very important for analyzing and optimizing digital ad campaigns. CPA is an important metric to track the performance of a conversion campaign. CPA is the cost, how much advertisers spent for acquiring one action. Lower CPA cost is good for conversion campaigns. Various factors are important for getting a good CPA.
What is CPA?
CPA stands for Cost Per Action or Cost Per Acquisition. CPA is calculated by dividing the total cost by the total actions.
CPA = Total Cost/Total Actions
Action or Conversion will differ based on the advertiser’s point of view. Few examples for you,
Sales – This is the most common conversion. When a user completes the purchase it’s considered a Sales Conversion.
Lead Conversion – When the user completes the form filling and provides their contact information to the company is considered Lead Conversion.
App Install – When the user installs the application it is considered App Install Conversion.
How can we use CPA to track campaign performance?
CPA is a very important performance metric to understand the effectiveness of digital ad campaigns. In the above image, four campaign performance data are available. As per the CPA costs, campaign C has received lower CPA costs. Lower CPA costs indicate good performance. So, campaign C performed well than other campaigns.
What are the common factors that affect the performance of a CPA campaign?
Actually, various factors affect the performance of a CPA campaign. We can classify the factors into three categories.
- External Factors
- Internal Factors
- Campaign Management Skills
External Factors
External factors like seasons and market conditions play an important role in campaign performance. For example, the summer season is very good for air conditioner sales. So, AC companies’ ad campaigns receive very good conversions during this season.
Internal Factors
Internal factors like product price, offers, and features also plan an important role in campaign performance. Without good internal factors, one AC brand can’t receive good conversions compared to other AC brands.
Ad Campaign Management Skills
Along with external and internal factors, digital campaign management skills are also very important for receiving more conversions. As a “digital marketer”, I will explain various factors that need to be considered to increase conversions and lower the CPA of a digital campaign.
So, what is a good CPA?
Before going to see the factors, we will first identify the good cost per action. So that only we can optimize our digital ad campaign to reach the best cost per action. Good CPA cost will differ for each business and their conversion point.
For example, the car company’s “store visit” lead generation conversion will be cost higher than the hotel room booking conversion cost.
Matured companies consider customer’s life time value (LTV) to identify the best cost per action. They see overall impact of their digital ad campaign instead of looking the performance of each campaign.
Platform
Where you run your ad campaign, choosing the correct ad platform is a very most important factor for your business success. Each platform has its own type of audience and ability to reach goals. Recently, I received a request to run a lead generation campaign. Their goal is to get innovative ideas from engineers and scientists to recover & manage the lake. In this situation, we need to target people who are already working as engineers and scientists. We can easily target these kinds of people using their Job Profiles on LinkedIn. We suggest the client to allocate more budget on LinkedIn than other platforms.
Likely, we first identify the platform where our audiences are available. This is a very important factor for receiving more action. When you receive more actions your CPA cost is automatically lowered.
Campaign Strategy
Campaign strategy is very much important for digital advertising success. Without understanding the nature of digital advertising, most owners asked to run a lead or conversion campaign directly. Most time they won’t get the expected leads or conversions because of their poor strategy.
The basic strategy of a digital campaign is very simple,
> Awareness
> Consideration
> Conversion
Budget Allocation/Bid Allocation
Both budget and bid price is a very important factors for getting more action. Every ad platform has its own learning method to meet the goal.
> You should allocate a higher budget to receive more actions and it will help to reduce the average CPA cost.
> Mostly, you can use an automated bidding strategy to allow the platform to adjust the bid price itself to meet the goal.
> If you run your ad campaign on Facebook, you can reduce the number of adsets by group the audiences. So, Facebook can allocate more budget to the adsets. That will help the ad group to get out of the learning phase and perform well.
> Do not use very low targeted CPA goals. This may affect your campaign performance. So, always set proper targeted CPA goals.
Target
Audiences: Targeting audiences with right message will help to increase the conversion rate. So, do research, find suitable audiences and target them. Various types of audiences are available. For example, Affinity audiences, In-Market Audiences, etc.
Device: Use device targeting effectively [Desktop, Tablet, Mobile, Smart TV]
Demographic: You can use age targeting and gender targeting effectively.
Day Part: Use the day part to spend your budget effectively on particular hours/days
Ad Personalization
Ad preview is also very much important for acquiring people’s attention. So, brands should concentrate more on creative design and ad copy preparation.
> Include offers or unique features in the banner
> Use images and fonts more attractive
Campaign Optimization
Various factors are involved in the campaign’s success. Even if you fulfill the above factors sometimes ad campaigns are not performing well. So, you should do campaign optimizations in order to improve the campaign’s success.
Basically, campaign optimization can be divided into four major types.
> Identify the Reason For Poor Performance
> Use Black List And White List Effectively
> Reallocate The Budget
> Conduct A/B Test
I already wrote an article to optimize the low performing campaign. You can go through this post in order to know the technique to improve your campaign performance. [Click Here]
Thank you so much for the clarification and answers. Will come back with more questions!
You are welcome!