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<\/a><\/p>\nHere\u2019s what I\u2019ve learned about what exactly CPA is, how to calculate cost per acquisition, how the bidding process works, and some key principles for crafting creative and convincing ad copy.<\/p>\n
Table of Contents<\/strong><\/p>\n <\/a> <\/p>\n \n Many marketers prefer the cost-per-acquisition pricing model because they can define an acquisition before they start advertising and only pay when their desired acquisition or action occurs.<\/p>\n For example, if you define acquisition as submitting one specific form, you\u2019ll pay each time that form is submitted \u2014 but not when visitors click on your ad and simply view the form.<\/p>\n I like this model because it allows you to stretch your advertising budget just a bit farther. (Check out these free templates<\/a> to help you manage your budget!)<\/p>\n This pricing model is used in a handful of paid marketing mediums, including:<\/p>\n <\/a> <\/p>\n If you\u2019re considering pay-per-click advertising, you need to understand CPA. It\u2019s an important metric to help you plan your advertising strategy.<\/p>\n To help you better understand why, I thought it would be useful to share insights from marketing and advertising specialists.<\/p>\n Here\u2019s what they said when I asked, \u201cWhy is cost per acquisition important?\u201d<\/p>\n Ross Kernez<\/a>, founder of SEO Meetup and CEO of Stealth, told me that your CPA can help you better plan your multi-channel marketing strategy, including PPC, social media, and content marketing.<\/p>\n Kernez said, \u201cKnowing your CPA enables better allocation of marketing budgets. It helps marketers identify which channels are more cost-effective in delivering results, allowing them to focus resources on high-performing campaigns while cutting back on underperforming ones.\u201d<\/p>\n Calculating your cost per acquisition can also help you identify strengths and weaknesses in your marketing strategies. Then, you can trim away efforts that aren\u2019t pulling their weight and focus more of your time and resources on campaigns that bring the most conversions.<\/p>\n Cristina Muchi<\/a>, founder and CEO of Upway Marketing, put it this way.<\/p>\n \u201cCPA is the yardstick for measuring how efficiently the marketing dollars are working for the brand. Whether the company is using Facebook ads, Google search, or email marketing, every platform and campaign incurs a cost. CPA shows us which strategies are truly delivering conversions without burning through the budget.\u201d<\/p>\n Alfred Goldberg<\/a>, president of Absolute Marketing Solutions, told me that calculating your CPA helps eliminate guesswork in marketing and makes it easier to scale your efforts.<\/p>\n Goldberg said, \u201cYou can confidently scale your campaigns when you know your CPA is profitable. If you\u2019re spending $10 to get a customer who spends $50, why wouldn\u2019t you increase your ad budget? CPA lets you grow without the guesswork.\u201d<\/a><\/p>\n <\/a> <\/p>\n To calculate your advertising campaign\u2019s CPA, take your total advertising spend and divide it by the number of acquisitions generated.<\/p>\n Here\u2019s what that looks like: Let\u2019s say you have an advertising budget of $5,000. However, you only spend $2,500 and generate 1,200 conversions.<\/p>\n Your math will look something like this:<\/p>\n CPA= 2,500\/1,200<\/p>\n This gives you a CPA of $2.08. In other words, each conversion costs around two dollars of your advertising budget.<\/p>\n (Alternatively, you can use the Return on Ad Spend (ROAS) calculator<\/a> to quickly crunch these numbers and a few other important metrics!)<\/p>\n Keeping tabs on your cost per acquisition \u2014 and other key indicators of successful marketing \u2014 is an essential part of continuing to grow your marketing efforts. That\u2019s why I recommend including CPA in your monthly marketing reports, to ensure you\u2019re regularly checking in and evaluating whether your ad spending is being put to optimal use.<\/p>\n Pro tip:<\/strong> If you don\u2019t already create monthly marketing reports, check out these templates<\/a> to get you started.<\/p>\n <\/a> <\/p>\n Now that you know why CPA matters and how to calculate yours, you might be wondering what a good cost per acquisition looks like. Or, in other words, what numbers should you aim for?<\/p>\n I\u2019ll let you in on a secret: a \u201cgood\u201d cost per acquisition varies by industry. So, a $5 CPA might be perfect for one but entirely too high for another.<\/p>\n Still, while there\u2019s no hard-and-fast rule, there are some guidelines to keep in mind I like to keep in mind.<\/p>\n Ideally, you want to keep your CPA as low as you can while still hitting your desired conversion rates.<\/p>\n I like how Randall Yates<\/a>, CEO of The Lenders Network, explains it. Yates says, \u201cIf you can keep your CPA low, you\u2019re in a position to thrive because every dollar spent brings in more value. It’s like a well-oiled machine \u2014 you\u2019re reaching your ideal customers efficiently, and that\u2019s how you scale a business.\u201d<\/p>\n On the flip side, Yates adds that if your CPA is too high, \u201cit means your marketing efforts aren\u2019t hitting the mark, and you\u2019re throwing money at a problem without getting the returns. I\u2019ve seen businesses struggle and fail because they couldn\u2019t get their CPA under control. So, for me, lowering CPA isn\u2019t just important \u2014 it\u2019s make or break.\u201d<\/p>\n To avoid spending too much on advertising, a good rule of thumb is to aim for a 3 to 1 ratio. This means that for every three dollars you spend, you make one conversion.<\/p>\n For example, if I\u2019m spending more than $3 per conversion, I\u2019ll want to evaluate my marketing strategies to see what\u2019s not working and adjust accordingly.<\/p>\n If I\u2019m spending way less<\/em> than $3 per conversion, on the other hand, it may be time to increase my ad spend a little and scale my marketing efforts.<\/p>\n If you\u2019re still not sure whether you\u2019re hitting a healthy CPA \u2014 or if you\u2019re just starting out and don\u2019t have much data of your own to analyze \u2014 try reaching out to other marketers in your industry to compare notes.<\/p>\n This will help you get a better understanding of your CPA and if it\u2019s too high or low for your industry. Plus, it\u2019s a great way to expand your network and potentially even get some insider tips from people with more experience in your field.<\/p>\n <\/a> <\/p>\n Cost-per-acquisition bidding doesn\u2019t work quite like a typical auction. Advertising platforms like Google want to level the playing field when it comes to leveraging the size of their reach. So, instead of the highest bidder always winning the auction, these platforms award the top ranking for each keyword to the bidder with the highest ad rank.<\/p>\n Here\u2019s how it works.<\/p>\n This means organizations can\u2019t acquire the top ranking for any keyword they want just because they have the biggest ad budgets, which is a relief for smaller marketers like me. Their content has to be engaging, and because of that, you and I can fairly compete with them.<\/p>\n To generate as many conversions as possible within the limits of your advertising budget, consider using Google\u2019s target CPA bidding<\/a>.<\/p>\n Target CPA bidding leverages machine learning to:<\/p>\n If you use target CPA bidding, some of your conversions may cost more than others because your quality score or the competition in your ad auction might fluctuate. However, Google will try to keep your actual cost per acquisition as close to your average target CPA as possible.<\/p>\n <\/a> <\/p>\n \n Setting a lower target cost per acquisition is a good starting point for lowering your CPA costs and maximizing your ad spend. However, CPA isn\u2019t the only metric that determines the effectiveness of your advertising.<\/p>\n In this section I\u2019ll take a look at some other tweaks you can make to your marketing strategies to make the most of your efforts and resources.<\/p>\n Since your ad\u2019s quality score plays such a huge role in securing a top ad ranking, one of the best ways to optimize your CPA costs<\/a> is to craft compelling ad copy.<\/p>\n When you sit down to write an ad or landing page copy, your goal should be to write something so captivating that it can grab the attention of a distracted consumer who has Netflix on in the background while they scroll through TikTok.<\/p>\n One way to do this is by selling a feeling, not a product \u2014 or, in other words, by selling benefits instead of features to drive emotion-based action.<\/p>\n For example, I wouldn\u2019t just say, \u201cThis computer has twelve hours of battery life.\u201d Instead, I\u2019d make a more compelling argument: “With 12 hours of uninterrupted power, you can create, work, or explore the web all day, at your desk or on the go.\u201d<\/p>\n It may seem obvious, but it bears stating anyway: Acquiring new customers is often more costly than retaining existing ones.<\/p>\n What\u2019s more, repeat customers tend to generate more revenue over their lifetime compared to one-time purchasers. So, by focusing on customer retention, you can increase the customer lifetime value (CLV) of your customer base.<\/p>\n Some of the best ways to increase customer retention include:<\/p>\n By focusing a majority of your marketing efforts on customer retention, you can leverage the investment you\u2019ve already made in acquiring those existing customers, reducing the need for additional acquisition spending. This ultimately leads to a lower CPA.<\/p>\n Just because you\u2019ve crafted an attention-grabbing ad doesn\u2019t mean your work is done. You still need to design a compelling landing page that clearly conveys the value of your offer.<\/p>\n Here are some ways I like to do that:<\/p>\n Pro tip:<\/strong> For even more help optimizing your landing pages to drive revenue, check out HubSpot\u2019s Marketing Hub<\/a>.<\/p>\n The power of a CRM lies in its ability to centralize and manage your leads. By organizing leads based on their stage in the sales cycle, you can prioritize your efforts on those with the highest potential to convert.<\/p>\n As a result, you can avoid wasteful spending on leads that are less likely to convert, leading to a lower CPA overall.<\/p>\n For best results, I recommend taking the time to analyze how your leads interact with your sales funnel and CRM. This can help you identify sticky points that might lead to customer loss.<\/p>\n Pro tip: <\/strong>Try out HubSpot\u2019s free CRM<\/a> to jumpstart this process.<\/p>\n To acquire more customers and lower CPA costs, you need to understand your audience. After all, how can you speak to your audience if you don\u2019t know who they are? That\u2019s where market research comes in.<\/p>\n Market research helps you gain insights into the needs, preferences, demographics, psychographics, and behaviors of your target audience. This information enables you advertise on the right platforms and refine your targeting perimeters.<\/p>\n Plus, it helps you adjust your messaging to resonate with the right people. This, in turn, increases the relevance of your ads and content, resulting in higher engagement, click-through rates, and conversions.<\/p>\n If you aren\u2019t sure where to start your market research, check out social media platforms and forums like Reddit. Reading posts from people in your target audience will help you learn about their wants, needs, and pain points.<\/p>\n Pro tip:<\/strong> You guessed it \u2014 HubSpot also has a free market research kit<\/a> with templates and planning docs to help.<\/p>\n\n
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Why is cost per acquisition important?<\/strong><\/h2>\n
1. Plan your marketing budget.<\/strong><\/h3>\n
2. Improve your conversion rate.<\/strong><\/h3>\n
3. Easily scale your efforts.<\/strong><\/h3>\n
How to Calculate Cost Per Acquisition<\/strong><\/h2>\n
![\"cost](\"https:\/\/web-stil.info\/wp-content\/uploads\/2025\/04\/cost-per-acquisition-1-20250415-6050749.webp\" "\\"\\"")
<\/p>\nWhat is a good cost per acquisition?<\/strong><\/h2>\n
Keep It Low<\/strong><\/h3>\n
Maintain a 3 to 1 Ratio<\/strong><\/h3>\n
Ask Around<\/strong><\/h3>\n
How Cost Per Acquisition Bidding Impacts Ad Rank<\/strong><\/h2>\n
![\"ad](\"https:\/\/web-stil.info\/wp-content\/uploads\/2025\/04\/cost-per-acquisition-2-20250415-2057970.webp\" "\\"\\"")
<\/p>\n\n
Target CPA Bidding<\/strong><\/h3>\n
\n
1. Write compelling ad copy.<\/strong><\/h3>\n
2. Prioritize customer retention.<\/strong><\/h3>\n
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3. Enhance your landing pages.<\/strong><\/h3>\n
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4. Leverage your CRM to prioritize high-quality leads.<\/strong><\/h3>\n
5. Conduct market research regularly.<\/strong><\/h3>\n
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