Digital Marketing Concept | Cost-Per Acquisition
With this weeks’ digital marketing concepts, I want to chat about cost-per-acquisition or CPA. “CPA bidding enables advertisers to pay only when their advertisements result in successful conversions. If a website sells flags, and the advertiser bids $10 CPA, she would owe $10 every time an ad led to a flag purchase on her website. So if her ads led to 10 purchases, she would owe $100 regardless of whether those ads brought 100 or 1,000 visitors to her website. To use CPA bidding, a website must have conversion tracking activated in its web analytics package so that the ad network can verify the number of conversions occurring on the website, (Lapper & Drapper, 2018).
I selected an article that discussed a bit about how cost-per-acquisition is being utilized in the “real world” today. This article titled Microsoft Infuses Audience Targeting Into Its Search Ads written by Sarah Sluis. The article was published on September 19, 2019, by AdExchanger. The publication discusses how “Microsoft is enabling two types of audience targeting to improve search ad performance, which it built to bring its ad offering to parity with Google Ads” (Sluis, 2019). “Brands can target search ads based on products the person has viewed, and they can target Microsoft audiences similar to their own customers. Both products are still in open beta, and Microsoft expects customers to test these new features as the holiday shopping season approaches. Microsoft’s pilot found that targeting search ads using data from previously-viewed products doubles the conversion rate and lowers cost per acquisition 40%. Targeting audiences similar to a brand’s customers boosted conversion rates by 70%. Microsoft’s auctions are less competitive than Google’s, advertisers pay less and see bigger ROI — even before the new audience targeting features were added in” (Sluis, 2019).
The article brought some interesting information about how their two new types of audience target to improve search ad products. However, as far as discussing cost-per-acquisition — it was pretty slim. The only mention of cost-per-acquisition was when the author mentioned: “Microsoft’s pilot found that targeting search ads using data from previously-viewed products doubles the conversion rate and lowers cost per acquisition 40%” (Sluis, 2019). The publication also discusses other concepts from this week such as target audience, targeting search ads, conversion rate, and Google Ads. What I did like about finding this article was the mention of cost-per-acquisition involved an extremely well-known brand (Microsoft), so it really puts it into perspective that concepts like cost-per-acquisition are utilized in the real world. The reason is that there many benefits to cost-per-acquisition.
The first benefit of cost-per-acquisition is because of the desired outcome. “the affiliate marketing software with the cost per acquisition is more beneficial because you are only paying whenever the desired outcome is achieved” (Five benefits…, 2017). Another benefit of cost-per-acquisition is it demonstrates effectiveness. “An effective advertising campaign would mean that the CPA is at its low rate, therefore, imagine the number of visitors that are converted and becomes your potential client. This makes paid advertising an excellent choice because you only need to pay less rather than depending on the company’s budget” (Five benefits…, 2017). An additional benefit of cost-per-acquisition is it’s economical. “Most of the advertiser would also choose cost per acquisition because it helps your business gain more regarding the visitors converted into as clients. Even if it is efficient or effective, the advertising is still subjected to the practice of search engine optimization strategy” (Five benefits…, 2017).
It will be interesting to see cost-per-acquisition continues to have an effect on websites and businesses.
References
Five benefits of working on cost per acquisition. (2017, August 21). Trackier. Retrieved from https://trackier.com/blog/five-benefits-of-working-on-cost-per-acquisition/
Larson & Drapper. (2018, November). Digital Marketing Essentials.
Sluis, S. (2019, September 19). Microsoft infuses audience targeting into its search ads. AdExchanger. Retrieved from https://adexchanger.com/online-advertising/microsoft-infuses-audience-targeting-into-its-search-ads/
