Post by account_disabled on Dec 3, 2023 5:01:21 GMT 1
The target CPA (cost per action) is one of the key performance indicators (KPIs) for managing media campaigns on agencies such as Facebook ads or Google ads.Unfortunately, there is no universal method for calculating it.As a result, many businesses don't know how to calculate their target CPA.Some come out with a number at random.Others ask their peers (businesses in the same industry) to set a target CPA not to exceed for their campaigns.In short, I ultimately know few marketers who have ever taken the time to calculate their target CPA.
based on their company's economic data.At my agency DHS Digital , we calculate target CPA (and ROAS) in an almost scientific way.We rely on an approach that takes into account average shopping baskets, costs and profit margins to identify a realistic target CPA to achieve for the campaigns.In this article, I share with you our entire CPA calculation method (for an e-commerce business model and lead generation) with examples. At the end of the article, I also explain how to effectively manage your campaigns based on of the target CPA1) What.
is target CPA and why calculate it?Let’s first d Europe Cell Phone Number List efine CPA.This is cost per action . This is the amount spent by the advertiser to generate an action by a user affected by its ads. In other words, how much does an action (purchase or lead) cost you on Facebook or Google ads?On advertising networks (Facebook, Google, Pinterest, etc.), it is calculated as follows :CPA = Budget spent on the advertising network ÷ Number of conversions (purchases or leads).If I spent €1000 and generated 100 conversions on my site following the distribution of my campaigns, the CPA of my campaigns is therefore €10.With this information, we can already deduce several things:The higher the CPA, the more a purchase costs usAnd.
therefore the more the product must be sold at a high price to be able to absorb this cost spent by the advertiser to generate a sale on his siteLet’s take an example for an e-retailer.If I sell my product for €100 and my CPA is €50, I have a margin of €50 left from which I should deduct other costs (variable costs and fixed costs). I will then be left with a profit from the sale of this product.Conversely, if my product costs €50 and my CPA is €50, I don't make any margin at all. I even lose money since I still have to deduct my product costs (COGS – Cost Of Good Sales) and fixed costs. We will come back to itYou therefore understand the importance of properly calculating your target CPA in order to be able to judge whether your advertising efforts are profitable or not, and whether you can afford to increase your budgets to generate more conversions (purchases or leads). .
based on their company's economic data.At my agency DHS Digital , we calculate target CPA (and ROAS) in an almost scientific way.We rely on an approach that takes into account average shopping baskets, costs and profit margins to identify a realistic target CPA to achieve for the campaigns.In this article, I share with you our entire CPA calculation method (for an e-commerce business model and lead generation) with examples. At the end of the article, I also explain how to effectively manage your campaigns based on of the target CPA1) What.
is target CPA and why calculate it?Let’s first d Europe Cell Phone Number List efine CPA.This is cost per action . This is the amount spent by the advertiser to generate an action by a user affected by its ads. In other words, how much does an action (purchase or lead) cost you on Facebook or Google ads?On advertising networks (Facebook, Google, Pinterest, etc.), it is calculated as follows :CPA = Budget spent on the advertising network ÷ Number of conversions (purchases or leads).If I spent €1000 and generated 100 conversions on my site following the distribution of my campaigns, the CPA of my campaigns is therefore €10.With this information, we can already deduce several things:The higher the CPA, the more a purchase costs usAnd.
therefore the more the product must be sold at a high price to be able to absorb this cost spent by the advertiser to generate a sale on his siteLet’s take an example for an e-retailer.If I sell my product for €100 and my CPA is €50, I have a margin of €50 left from which I should deduct other costs (variable costs and fixed costs). I will then be left with a profit from the sale of this product.Conversely, if my product costs €50 and my CPA is €50, I don't make any margin at all. I even lose money since I still have to deduct my product costs (COGS – Cost Of Good Sales) and fixed costs. We will come back to itYou therefore understand the importance of properly calculating your target CPA in order to be able to judge whether your advertising efforts are profitable or not, and whether you can afford to increase your budgets to generate more conversions (purchases or leads). .