Digital Marketing Costs: CPA vs CPC
What is it actually costing you as the advertiser on the search engines to drive your ideal customer, and beyond that, does the dollar amount you are spending to drive that customer make sense?
In any paid search campaign, the most common measurement monitored by advertisers is CPC (cost per click); it is the metric used to show you how well your advertising is working on the search engines. Your average CPC is determined by taking the total cost of your paid search campaign and dividing that by the number of clicks your website received. For example, if your average CPC is one dollar and you received one hundred clicks, your total spend would be one hundred dollars. That exposure sounds great, but what if you only generated one customer for your investment of one hundred dollars and that customer only spent one hundred dollars? That no longer seems to be a great way for you to spend your advertising dollars.
Staying true to our 100% transparency principles, at Xcite we choose to manage your campaigns by CPA (cost per acquisition), a metric that is much more important to our clients. By focusing your advertising on our CPA model, you have much more control on your return on investment. Using the tracking and reporting tools available to us, we are able to determine how many of those one hundred clicks made contact with you and if they became your client. We are also able to adjust your acceptable CPA based on the value of the client you are driving.
Using the example from above, spending twenty five dollars to acquire a client that spends one hundred dollars might be fine with you, but what if the potential client you are advertising to will be spending one thousand dollars with your business? You would most likely be willing to spend much more than twenty five dollars in advertising to give yourself the best opportunity to be in front of that client when they are ready to make a buying decision!
Search engines still charge every advertiser on a CPC basis, we are not exempt from following their rules; yet, we still manage your advertising campaigns to the lowest average CPC available. By continuing our tracking through to CPA, we are able to give our clients a much clearer picture of how their paid search advertising is performing for them.