Cost Per Acquisition (CPA) Advertising
Cost Per Acquisition advertising, also known as Cost Per Action advertising, is a method of paying for advertising that allows the advertiser to pay for each conversion as a download, transaction, or lead instead of paying each time someone clicks on the ad. In other words, the advertiser only pays when the user completes a transaction. In traditional CPC models, the advertiser pays each time someone clicks on the ad.
Here’s a real-world example. A bookstore that holds author events is selling tickets to certain popular events. Because authors tend to have large social media followings, the bookstore team has decided to post advertisements on Facebook and Twitter. With traditional CPC advertising, the bookstore would have to pay each time anyone clicked on the advertisements for any reason. With CPA advertising, the bookstore team only has to pay when someone clicks through the advertisement to the ticketing site and actually purchases a ticket, which financially benefits the bookstore operation and isn’t just an “empty click.”
How to Lower Your Cost Per Acquisition (CPA)
The best way for small businesses to lower their Cost Per Acquisition (CPA) is to maximize your keywords so that you are using keywords that your customers use when searching for your specific product or service. In other words, you must be able to turn your keywords into a sale. This process requires looking for quality keywords so that you gain a competitive advantage but more importantly that the researched keywords result in a profit.
Another important step to lowering your CPA is setting a maximum cost-per-acquisition (CPA). This is the bid you are willing to pay for a conversion that results in a transaction. For instance, if your maximum CPA bid is three dollars, you will not pay more than that price. Your small business could also end up paying less, depending on what others are bidding. You may also have the option to decrease or increase your maximum bid, depending on the nature of your small business’s marketing strategy.
Another strategy for your small business may be to engage a professional service company that specializes in finding the right keywords for your audience and market as well as setting the price. There are many keyword research services that provide small businesses with the ability to continually research keywords and create a relevant and effective list of keywords to help a small business increase site traffic and lower your CPA. This is an effective strategy for controlling advertising spending and reducing advertising rates.
Quality Score is another effective strategy for a small business to lower its CPA rates. This term refers to a grade that search engines apply to your advertising campaigns. The higher a search engine grades your campaign, the less you will be charged for your click-throughs. The advertisements will also be better positioned in the sponsored links column that appears at the beginning of most searches. Quality score is also affected by text relevancy, keyword relevancy to your particular ad group, landing page quality and your click-through rate.