First let’s address the question of:
Cost Per Conversion vs. CPA
These are actually different names for the same thing. CPA stands for “cost per action” and an action can be any number of things you may want to track:
- A phone call
- A purchase
- A mailing list signup
- A visit to a specific page on your website
AdWords has features that allow you to track any of these things. The data is then available to you in your account. So if there is a sale made on your website, you can find a lot of information about that sale, including:
- The keyword that was searched
- The ad that was clicked on
- The time of day the click happened
- The geographic location of the user
- How much you paid for that click
How To Determine Your CPA
Your total cost, divided by the number of conversions your campaign generates, equals your CPA. If you make two sales out of 100 clicks, and the cost of those 100 clicks is $100 ($1 average cost per click), then your CPA is $50.00 ($100 divided by 2).
The CPA can be viewed and analyzed at the campaign level, the ad group level, and the keyword level. It can be viewed for every geographic location and time of day you are targeting. It can also be viewed for mobile devices vs. desktops vs. tablets.
Use this data to identify what is working and what isn’t. If your CPA for any given target is greater than your profit (and there have been enough clicks to ensure the data is statistically significant) then it’s time to make a change.
Lower your bids, rewrite your ads, work to improve your quality scores, or eliminate the keywords entirely.
Almost every campaign will have pockets that are profitable and pockets that aren’t. Campaign optimization is the process of eliminating or improving the pockets that don’t work, while maximizing traffic from the pockets that do work.
CPA is the best indicator of campaign success, so if you are not currently tracking any conversions, you will want to get some kind of tracking in place as soon as possible.