The CPA of CPC

A few quick notes on creating keyword campaigns

Cost-Per-Click (CPC) ads on Google and Overture are nothing new, but perhaps thinking about them in terms of cost per acquisition rather than per click is new to you. To review, CPC works like this:

• You find a keyword that will bring you traffic.
• You bid on that keyword.
• People click your PPC ad and come to your site.
• They buy stuff.
• You’re happy.
• And it only cost you 10¢ for the click! What a bargain.
  

Or is it?

Let’s say that you get 100 clicks on your ad.
And of those 100 clicks, 1 person buys your product. (that’s a 1% conversion rate)
Let’s say your average sale is $35.00

You paid this much for your ad: 100 x 10¢= $10
Which means your Cost-Per-Acquistion (CPA) was $10

Can you afford to pay $10 for every $35 you make?

CPA is an important consideration when creating PPC campaigns.
It’s affected by:

• The number of clicks you receive
• The number of people who buy from those clicks
• The amount you pay per click
  

You can dramatically alter your CPA by paying attention to:

• The relevancy of the ad you place with the keyword
• The destination you link the ad to (does it make sense to the user and does it help them or confuse them?)
• The price you’re paying per click
• Conversion rate from visitor to buyer
• Abandonment rates – figure out why they are leaving without buying