What is Cost Per Acquisition

What is Cost Per Acquisition? Cost per acquisition, or CPA, is the metric used to determine how much money you have to spend to gain a new customer.  While many of you know this you may not know how to measure it from your digital marketing campaigns.  In fact anyone that’s ever managed complex digital marketing campaigns can tell you that they are just that, complex. The reality is that it is extremely difficult if not impossible to predict how much that new customer will cost in the beginning. But over time, well run digital marketing campaigns deliver better and better data and often lower CPA as time goes on.  Let’s say you have a product or service targeting professional female executives in Los Angeles.  You think that each new customer is worth spending $100 to acquire.  You’ve contracted VOX to help you get 100 new clients at $10,000.  We know Facebook has a large female following and professionals spend time on Linked In.  Well-produced videos are powerful and that may cost another investment of let’s say $10,000.  We produce the video with one of these goals:

  1. Visit the website
  2. Connect with a representative
  3. Call the office
  4. Walk in

Now we break the campaign into four parts.  The Facebook campaign, Linked In campaign, Google/YouTube Search and Display Campaigns.  With a $2,500 budget each we’re now ready to see which campaign will perform best.  As we monitor engagement we can determine the best course of action by stopping some and boosting others and we can run different ad groups within each campaign.  The Google ad budget may be swallowed up quickly while Facebook may elicit passionate and not always favorable comments.  We’ll measure all of those things and eventually come up with an idea.  If 10,000 people viewed the video and 100 clients met one of those four goals above then we’ve done our job.  The final conversion, the actual sale of the product or service is your responsibility.  But we can help with that too.  The sales cycle is usually lead, prospect, client, advocate.  So make it easy for the lead to fill out a form.  Make it easy for a prospect to download a case study.  Make it easy to purchase or sign up for a client and reward your repeat clients with gifts after posting reviews.   You want the sales part of the puzzle to be easy and painless.  Three clicks to check out and then simple and effective checkout that works on mobile. These are all steps that are discussed in other posts but the good news is that now you have a metric and a process by which to apply it.

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