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Breaking the CPC Myth: How CPA Drives Online Advertising Growth

This is curated content from the best of the best blogs around IMHO, indispersed with a few of my own.

Digital marketing consultant Mike Raybone recommends prioritising Cost Per Action (CPA) over Cost Per Click (CPC) to efficiently gauge advertising success. He advises focusing on conversions and revenue, emphasising the importance of average order value and customer lifetime value for maximising advertising ROI.

This article is a must read!! You could have been doing it all wrong.. all along! Sit back, fasten your seat belt and endure the tough read. Who knows? You may learn something. 

The Ancient Struggle: CPA or CPC?

cost per click

Ever scrolled through endless guides whispering about the elusive “good” cost per click (CPC)? Let me tell you, as a veteran digital marketer, that question leads down a rabbit hole of frustration. Why? Because in the whirlwind of AdWords, Facebook Ads, and online advertising, fixating on cost per click is like staring at a single leaf while missing the entire forest of potential growth.

Can you imagine this?

You run a spiffy sneaker store and you slap some ads online, hoping to attract foot traffic. Then, you see clicks happening, but your “perfect” CPC hasn’t materialised. Panic sets in. Are you wasting money? What if competitors are stealing your clicks?

Hold on! Before you lose sleep over every penny, let’s shift focus. Let’s ditch the obsession with click costs and step into a world where return on investment (ROI) reigns supreme. This guide is your passport to that world, a beginner’s manual for understanding the true power of online advertising beyond mere clicks.

What is our commitment?

We’ll dive into the basics: CPC, sure, it’s how much you pay for each click on your ad. But what about CPA (cost per acquisition)? That’s the real magic trick! It’s the total cost you incur to get someone to take a desired action, like buying those cool kicks. Imagine, instead of fretting about a 50-pence click, you celebrate a £10 purchase driven by that click. That’s the shift we’ll make.

We’ll explore platforms like AdWords, Facebook Ads, and Twitter Ads, understanding how they use CPCs to discover your target audience. We’ll learn to analyse data that goes beyond clicks, metrics that paint a clear picture of your campaign’s effectiveness. Forget chasing shadows like “good” CPCs; we’ll focus on the sunshine of profitable conversions.

This journey isn’t just about technical jargon. It’s about awareness: about understanding how online advertising works, how to learn its language, and how to begin crafting campaigns that drive real results. It’s about the freedom to explore beyond click costs and into the vast potential of ROI.

So, buckle up, fellow explorer! We’re leaving the land of penny-pinching CPCs and venturing into the exciting realm of profitable online advertising. This guide is your map, leading you step-by-step through the basics, from AdWords fundamentals to Facebook Ads strategies. We’ll conquer the confusion, demystify the jargon, and empower you to master the art of online advertising with newfound confidence.

 

Why focusing on just “cost per click” can hurt your advertising (and what to track instead)

Imagine spending £50 on a single click! That’s what some companies pay for keywords in competitive fields like law or insurance. But the crazy thing is, most of those clicks won’t magically turn into paying customers. They’ll usually just sign up for a newsletter or free trial first. So, you might pay for 50 or even 100 clicks before someone buys something. That’s thousands of pounds for a single customer!

It’s tempting to focus on cost per click (CPC) because it seems like the key to saving money. After all, websites like WordStream publish annual reports with average CPCs across different industries. But here’s the catch: those averages aren’t very helpful.

Think of it like comparing apples and oranges. A generic term like “tax” might be cheap, but few people who click on it will buy something. On the other hand, a specific phrase like “file back taxes” might cost a lot more per click, but those clicks are much more likely to turn into paying customers.

So, focusing on just CPC is like looking at one piece of a puzzle without the whole picture. To really understand your advertising performance, you need to consider conversions – how many clicks lead to sales.

Let’s say the average CPC for ecommerce is £1 (pretty cheap!), but the average conversion rate is also low. What good is a cheap click if it doesn’t lead to a sale? That’s why cost per action (CPA) is a much better metric to track. It considers both cost and conversions, giving you a clearer picture of how much you’re really spending to get a customer.

Where’s the proof?

Digital Marketer ran two Twitter ads with the same target audience. One had a £7.81 CPA, while the other, after some optimisation, achieved a £1.38 CPA – a fivefold increase in conversions with the same ad budget! They didn’t even need to touch the CPC.

But, what is the bottom line?

Don’t get obsessed with CPC. Focus on revenue and conversions instead. Track how much you spend per lead or sale, not just per click. Sure, a higher CPC might seem scary, but if it leads to more sales and higher profits, it’s totally worth it!

How should I think of it?

Would you rather pay twice as much per click if it means doubling your revenue? Absolutely! Just make sure to account for your ad costs when calculating profit.

Remember, focusing on just CPC can leave money on the table and waste your existing budget. Optimise for conversions and watch your profits soar!

Key takeaways:

    1. CPC is just one piece of the puzzle. Focus on conversions and revenue instead.
    2. Track cost per action (CPA) to understand how much you spend per customer.
    3. Don’t be afraid of a higher CPC if it leads to more sales.
    4. Optimise your ads for conversions, not just clicks.

By following these tips, you can make your advertising budget work harder and achieve your business goals.

Don’t Panic About Click Costs – Give Your Ads a Fighting Chance!

Ever wonder why big companies throw tons of money at ads, while smaller businesses hesitate? Fear of wasting cash, that’s why! But listen up, small fry – obsessing over cost per click (CPC) can hurt your ad game. Here’s why:

Think Long-Term, Not Instant Gratification:

Sure, Salesforce throws 46% of their budget at marketing. But they don’t expect overnight riches. They know it takes time and data to crack the ad code. You wouldn’t judge a new recipe after five bites, right? So why give up on ads after five days?

Jennifer Shaheen, a pro in the know, says give campaigns at least 45 days. Think of it like planting seeds. You wouldn’t yank them up after a week to see if they sprouted, would you? Give your ads time to bloom!

The Numbers Game:

Let’s say you need two sales to break even on your ad budget. How likely are those two sales to happen in the first few days? Not very! It’s like flipping a coin – gotta toss it a bunch before you get heads or tails consistently. You need data, not guesses.

Beyond Budget Cuts:

Sometimes, upping your ad spend is the magic trick. Remember, you advertise to make money, not save it. Think of it like investing in seeds for a bigger harvest.

Check out tools like Ubersuggest. Here, you can see the average CPC for keywords like “analytics software” (it’s around £12.85, not bad!). Use that as a guide to set your bids.

Automation is your friend! Tools like AdEspresso let you set rules to increase CPCs if they’re too low. This helps you grab eyeballs and score more conversions.

Where is the catch?

Relying solely on CPCs can be risky. You might end up overspending and drying up your budget before finding the sweet spot. That’s why cost per action (CPA) is your best buddy.

CPA tells you the total cost to get a lead or sale. It’s like your budget compass, pointing you towards profitable campaigns. Don’t get lost in the CPC wilderness – grab your CPA map and watch your business blossom!

Key takeaways:

    1. Don’t judge ads too soon. Give them time to work their magic.
    2. Data is your friend. Use tools to understand your ad performance.
    3. Invest in growth. Sometimes, spending more gets you more.
    4. Focus on conversions, not just clicks. Use CPA to guide your spending.

So, ditch the CPC panic and embrace the long game. With patience, data, and the right tools, you’ll watch your ads sprout into a revenue-generating forest!

Why “Cost Per Click” Can Lead You Down a Garden Path (and What to Track Instead)

Imagine paying £100 for someone to click your ad. Ouch, right? That’s the reality for some businesses, like lawyers, where “Cost Per Click” (CPC) can skyrocket.

What’s the catch?

Even if your CPC is high, it doesn’t always mean your ads are failing. That’s where Cost Per Action (CPA) comes in, your new ad campaign BFF.

What’s the big deal?

Think beyond clicks. Let’s say your high-end shoe store has an average sale of £200. A £100 CPC might sting, but if it brings in a sale, you’re still making money! Compare that to a £1 CPC that leads to nothing – not so great.

CPA tells the whole story. It’s like the Robin Hood of metrics, taking into account both your CPC and conversion rate (the number of clicks that turn into sales). So, you can see how much you’re actually paying per customer, not just per click.

Automate your way to victory….

Tools like AdWords and Facebook let you set rules based on CPA. Imagine saying, “Hey robot, if my CPA dips below £50, pump up the ad budget!” This helps you snag more paying customers while keeping your spending in check.

But hold on, CPA isn’t perfect. Just like a delicious cookie isn’t a complete meal, CPA alone doesn’t give you the full picture. You also need to consider:

    • External factors: Maybe your target audience is having a tight budget this month. That would affect your sales, not your ads.
    • The ultimate goal: revenue. At the end of the day, you want more green in your bank account. So, while CPA is awesome, tracking actual revenue is the king of metrics.

 

What’s the bottom line?

    • Don’t get hung up on high CPCs. Look at your CPA to see if you’re actually losing money.
    • Use CPA to automate your ad spending. Let the robots do the heavy lifting (and budget adjusting).
    • Remember, revenue is the real rockstar. Track it alongside CPA for a clear picture of your ad success.
    • So, ditch the CPC anxiety and embrace the power of CPA. With a dash of automation and a sprinkle of revenue tracking, you’ll be cruising towards ad campaign victory in no time!

 

Why Focusing on Revenue (Instead of Just Cost) Makes All the Difference

Remember Spearmint Love, the blog that grew their revenue over 900% with Facebook and Instagram ads? Crazy, right? But here’s the twist: their success almost fizzled out. Their results plummeted, and they couldn’t figure out why.

Turns out, the problem wasn’t their ads or even their costs. It was their customers: parents who buy baby stuff until their kids grow up. Their customer base was aging out!

So, how did they overcome this outside factor? By focusing on increasing revenue, not just reducing costs.

How can I do the same?

Boost your average order value (AOV):
    • Bundle similar products: Think travel-sized essentials – they cost a few bucks separately, but a bundle of several might set you back £35. That’s 10x more!
    • Cross-sell related items: Show slightly cheaper add-ons after a bigger purchase. It uses a psychological trick called price anchoring, making the smaller items seem like a steal.
    • Expand your product line: Spearmint Love added deco pieces like baby lamps, appealing to a wider age range and keeping customers engaged for longer.
Maximise customer lifetime value (CLV):
  • Analyse your existing customers: See which groups spend the most (using a “vintage analysis”). Learn from their habits and apply those insights to everyone else.
  • Nurture existing relationships: Repurchases cost way less than acquiring new customers. A simple email campaign can do wonders!

 

Always remember the big picture…

  • Don’t be afraid of higher CPCs. If they lead to bigger orders and repeat purchases, you’ll come out ahead.
  • Focus on both sides of the equation. Optimise conversions and AOV alongside your ad spending. This can double or triple your ROI!

 

Think of it like this…

  • Campaign 1: High cost, barely breaks even. Most businesses get stuck here, obsessing over every penny.
  • Campaign 2: Higher AOV, just from bundling products. You’re profitable!
  • Campaign 3: High AOV and more repeat purchases. Boom! You’re making bank without touching your ad budget.

So, ditch the cost-only mindset and embrace the power of revenue-boosting strategies. By increasing AOV, CLV, and conversions, you can skyrocket your success and leave those CPC concerns in the dust!

Ditch the Clicks, Embrace the Cash: How You Can Dominate Ads in 2024

Forget chasing the cheapest clicks – the 2024 ad game is all about maximising revenue. While low cost per click (CPC) might seem tempting, it’s often a dead end. Just ask Mike Raybone, a digital marketing expert who helps businesses shift from click-chasing to conversion optimisation and CPA mastery.

Think about it…

If you focus solely on CPC, you might snag cheap clicks, but how many lead to actual sales? Not enough to make your ad budget sing. Instead, imagine maximising sales per pound spent. That’s where focusing on CPA comes in.

Here’s how YOU CAN dominate ads in 2024:

Ditch the CPC Benchmarks:

Forget those “industry average” CPC numbers. They’re just averages – not guarantees of success. Instead, identify high-potential keywords, even if they have higher CPCs. These keywords often attract audiences with high buying intent, meaning your chances of converting clicks into sales are much higher.

Embrace the CPA:

Track your cost per action (CPA) religiously. This tells you the true cost of acquiring a customer, not just a click. Optimise your campaigns around lowering your CPA, constantly testing and refining your targeting, ad copy, and landing pages. Remember, a slightly higher CPC can be easily offset by a higher conversion rate and increased AOV.

Boost Your AOV:

Don’t settle for selling single items. Bundle products, offer upsells, and cross-sell related items. Use price anchoring to make your main purchase seem like a steal compared to the smaller add-ons. Remember Spearmint Love? By bundling travel essentials, they increased their AOV tenfold!

Extend Your Customer Lifespan:

Treat existing customers like gold. Introduce subscription models, offer loyalty programs, and launch “consumable” products that encourage repeat purchases. Mike Raybone emphasises the power of increasing customer lifetime value (CLV) – loyal customers are your revenue goldmine.

Get Expert Help

Don’t navigate this alone. Consult with a digital marketing expert like Mike Raybone. He’ll help you implement these strategies, customise campaigns for your specific industry, and track your progress to ensure success.

 

How can I implement this?

  1. Stop chasing clicks and start chasing conversions.
  2. Track your CPA and relentlessly optimise for lower costs.
  3. Boost your AOV and CLV to maximise revenue per customer.
  4. Consult with Mike Raybone and unlock your ad campaign potential.

Remember, the 2024 ad landscape rewards those who focus on revenue, not just clicks. By embracing CPA, AOV, and CLV, you can transform your ad campaigns into profit-generating powerhouses. Don’t settle for click crumbs – go for the revenue feast!

Contact Mike Raybone today and start dominating your ads in 2024!

Give https://www.aiminternet.co.uk/ a look to start your quest with CPA.