What is the difference between CPA and CPC?
The CPC of a campaign can be used to determine how expensive it is to get a click on an ad. However, a click ultimately only means that a user has found the website or landing page that is linked to the ad. However, it does not mean that the user has also made a purchase there or registered somewhere.
The CPA, on the other hand, shows exactly which costs are associated with a so-called conversion – i.e. with a real success. The CPA is therefore seen as a particularly important key figure. As a company, the CPA shows you exactly how much the acquisition of a new customer or prospect has cost.
Calculate CPA
To calculate the CPA, the costs of the campaign are divided by the successes. A success is when a user has done what the ad was supposed to make him do. In addition to a product sale, this can also be the registration on a portal, the subscription to a newsletter or the completion of a survey.
CPA = Cost of the campaign : Successes
Calculate CPC
To calculate the CPC of an ad campaign, the costs for the campaign are divided by the number of clicks generated. The CPC is also quite important – because it shows how attractive the ad has been to the target group.
If the CPC is very high, there were only a few clicks. And that means that the ad seemed rather moderately attractive. But if the CPC is very low, there were many clicks – so the ad appealed to many interested parties.
CPC = Cost of the campaign : Clicks on the ad
CPA and CPC as Google Ad strategies
When placing a Google Ad campaign in online marketing, users have the option of specifying CPA or CPC as the main target. With the CPA target, you specify the conversion price, while on the other hand you can set the bid strategy type “manual CPC”. Both have advantages and disadvantages and are effective differently in individual cases.
What is more important CPA or CPC?
The answer is: both key figures are important. CPC shows whether an ad is appealing enough for potential customers to click on it. CPA, on the other hand, proves whether the campaign also generates real, usable successes.
If the CPC value is good, but the CPA is unsatisfactory, the conclusion is: the ad works, but the offer to which the user is directed is not yet convincing. If, on the other hand, the CPA is great but the CPC is very high, the attractiveness of the ad needs to be improved.
The most important success factor in online marketing: the conversion rate
A decisive value in online marketing is the conversion rate (CR). This value shows how many visitors to a website were converted into customers or, for example, newsletter sign-ups. The CR is not the same as the CPA – because the latter only refers to the costs per success for a specific campaign. The CR, on the other hand, represents the success rate of all visitors to the website. It therefore also includes those customers or interested parties who did not come to the site via the ad campaign.
These types of conversion or acquisition are common:
• Sale
• Newsletter registration
• Booking a consultation/coaching
• Request for quotation
• Participation in a survey
• Document download
• Contact
What is a good conversion rate?
The conversion rate of a campaign must ultimately be assessed by each company itself. As a rule of thumb, however, one can assume that a conversion rate of 2% is a normal value for a web shop. This means that two out of a hundred visitors have bought something. Anything above that is generally considered to be really good.
Also for the acquisition of clients for coaching or for the contact acquisition of prospects, 2 % is considered a normal value. If the ad is about getting people to sign up for a newsletter, 5-10% is an average value to aim for.
As a webshop operator, you can do a lot to optimise the conversion rate. Strategies include improved service such as free returns and the use of user-generated content such as user reviews.
Conclusion: Know and evaluate CPA and CPC
Both CPA and CPC are important metrics to assess the effectiveness and efficiency of an ad campaign. Because the costs per acquisition, e.g. sales success, are just as important as the costs per ad click. As a company, you should already set rough targets for both values before placing the ad.
In the course of the campaign, you can optimise either the ad design or your own offer on the landing page, shop page or homepage.
At ONELINE you will find all the important information on this topic.
