Cost per Acquisition (CPA) is the cost of advertising or marketing money used to convert leads or acquire them.
In simpler terms, you can ask: How much marketing budget must be spent to acquire a paying customer? Use the following formula to calculate your CPA: CPA = cost/conversions.
CPA reduction can help increase your ROI (return on investment) in a short time and without the need to spend additional money on traffic acquisition. You can control costs by prioritizing the acquisition of new customers.
Marketers often focus on gaining sales and traffic, rather than optimizing costs. Marketers often begin projects by thinking about ways they can make more money. They neglect cost optimization until too many resources are effectively wasted.
It's easier to reduce CPA at the beginning than it is to find ways to increase conversions. It's easier and better to find ways to lower marketing and conversion costs before sales numbers start to pour in.
Lowering CPA is more important than ever because “search marketing” has been deemed to be the best way to reach a specific demographic.
Effective Strategies to Reduce Your CPA
These are some best practices that you can use to lower your PPC marketing campaign's acquisition costs.
1. Optimize Your Landing Pages
Since childhood, we have been taught that the first impressions count. This is true for your website as well. Your landing page is the first page visitors see after clicking on an ad. This page can have a significant impact on overall conversions.
Consider doing an A/B test to determine the effectiveness of your landing pages. This will allow you to compare the success rate of different characteristics.
You could use Test A to drive traffic to one page regardless of what type of ad is being run. Test B could be used to target a more targeted audience.
Analyze the results by running both landing pages, splitting traffic 50/50. This will help you to determine which landing page has the best conversion rate and lowest CPA.
2. Take advantage of online video
Video is one of the best content types to drive engagement, and increase ROI. Half of B2B decision makers report using YouTube to research future purchases. 89% of marketers agree that video marketing has brought them good ROI.
Video marketing is a great way to drive people to your site, increase their time there, and generate leads. Video marketing can also seem daunting. Video marketing doesn't need to be intimidating. However, it should be strategic.
You can combine this with other search campaigns to dominate the majority of searches with less competition. YouTube searches can be targeted by keywords, location, gender, age, and target audience.
3. Use Retargeting Techniques
Retargeting, also known as remarketing, allows you reach people who have previously visited your website by showing them relevant ads from other sites within the Google Display Network.
By displaying ads on other websites, you can make connections with potential leads and encourage them to return to your site again.
Retargeting works by placing a code known as a retargeting tag onto your website. Everyone who visits your website will be tagged and added into your retargeting database.
These hot leads are great for you to return to with a compelling offer. Retargeting can be very profitable and will increase conversion rates as well as lower your acquisition costs.
4. For those who abandoned your shopping cart, you can run retargeting campaigns
There are many ways to use retargeting in marketing, but the most important audience is those who have abandoned shopping carts.
These visitors are the most important segment for retargeting. These visitors have a strong desire to purchase something from your site. They would even go so far as to select exactly what they wanted and add it to their shopping cart.
This segment is more likely to make a purchase if they are given the right message or if they have an appealing enough offer.
5. Temporarily stop targeting locations that generate little to no sales
Pareto applies to all situations. This is no exception. This means that 20% of sales come from the locations and 20% from the others.
It is also a good idea to concentrate your marketing budget on cities that can generate more sales than others. You might reconsider returning to no-sale areas once your revenue is more liquid or your budget is larger to make a bigger share of your sales.
6. Get a better quality score
The quality score is Google's rating for the quality and relevance of your keywords. It is used to determine the cost per click, multiplied with your maximum bid to determine where your ad rank will be in the ad auction process. (Source: Wordstream).
It will increase the effectiveness and clickability your ad by creating more relevant and tighter keyword groups.
This will lead to a higher clickability and relevancy, which in turn will improve your Quality Score, leading to lower costs per Click, lower cost per Conversion, and pricing discounts.
7. Make sure to regularly check your Search Terms Report for negative keywords
Always check your search terms report for unqualified or irrelevant searches. You should eliminate keywords that do not align with your marketing goals.
You might have to look at your reports more often if you are working with a brand new or just getting started in your online presence.
Negative keyword evaluation is a way to ensure that your ads don't target users who aren’t relevant to your offerings.
8. Make sure to update your ad copy
Have a look at the copy in your ad copy. Are your messages aligned to your ad objectives. What is your campaign's performance?
To better target qualified leads, you might need to make small adjustments to your CTA and current copy. To make a strong impression, you should first look at the research behind optimizing your CTA. To get people to take action in your favor, add urgency to your ads.
9. Keywords: Lower your bids
To find out how your keyword keywords impact your click through and conversion rates, run a Google Experiment.
Based on the results, adjust the keywords that you use and eliminate keyword bids that are not effective or causing an increase in marketing costs.
10. Temporarily stop non-converting keywords
As you consider pulling the plug on certain keywords, make sure you have thoroughly analysed your target cost per convert and your site's conversion rates.
It is important to evaluate the profitability and potential leads of keywords.
You should review your keywords and use your search terms report for top performers.
11. Optimize with a clear objective in mind
Even though you don't have a specific goal, it can be tempting to optimize your website quickly. Random optimization is when you make small tweaks every few days or implement changes as a reaction to what you see on the website. This happens without looking at your analytics.
Random optimization is simpler. It's not necessary to spend time planning, preparing, aligning and coordinating your objectives with your optimization efforts. This type of “on-the-fly” optimization can have negative consequences more often than it is good. These losses include lost time, missed sales opportunities, and money going down the drain.
It is better to plan your next strategies in advance. Begin by mapping out your daily goals and objectives for the next week, each month, quarter, and year. You can manage uncertainty and reduce risks more effectively this way.
This will give you an advantage over others who rely on random optimization to react to seasonal changes. Instead of implementing strategies and planning at the last minute, it's better to have a plan.
12. You can increase your email list by making an effort
Although email marketing may seem old-fashioned, it is the only marketing strategy that produces consistent results. It also offers the highest return of investment (3800%) and the lowest cost per acquisition rates, compared to other high-tech or sophisticated marketing channels.
It would be a mistake to not include this cost-effective option in all your current marketing campaigns.
When collecting information from website visitors, make sure you at least try to get their email addresses. Your marketing budget will be less if you have more contacts on your email list than you do renting advertising platforms such as Facebook and Google.
Don't forget to nurture your email list once you have built a strong following. You must ensure that your email list is maintained and continues to offer value to your subscribers. This is a proven method to build a relationship with clients and encourage loyalty among your subscribers.
13. Optimize your Checkout Process
The average abandonment rate for online shoppers at checkout is 68%. This is an alarming rate, especially when you consider that hidden fees are the main reason people abandon their online shopping carts.
It is essential to build trust with your customers. Extra charges added to the order can cause shoppers to be disoriented. This can be reversed by being clear about the purchase's total cost, including shipping costs.
Other issues that can turn off buyers include website time-outs, site crashes, screen freezing, and website time-outs. These problems create a bad buyer experience, which can lead to people abandoning your website. These issues can make a big difference in lowering your cost per purchase.
14. Temporarily stop any unprofitable paid campaigns
Are you running paid ads that are currently losing money over the last three months? Stop them.
Paid marketing campaigns like ad groups, keywords and other ads that haven't generated any sales in the last few months should be stopped until you have a data-backed reason for why they aren't converting.
After you have identified and corrected the problem, you may want to revisit these campaigns in order to find new optimization strategies.
15. Optimize your ads for mobile devices
Mobile-optimized ads improve the user experience, when potential leads view them and interact with them on their mobile devices. There are many reasons why it shouldn't impact the user experience. It doesn't mean that the ad is mobile-friendly just because it can be rendered on a smartphone.
How can you tell if your mobile-friendly ad isn't improving, but actually detracting from the user experience Your conversion rates.
Did the quality of your mobile ads improve? If they didn't, it could be not truly mobile-friendly. Optimize your chances of success with a mobile ad. It doesn't just render properly in a mobile browser but also elevates the buyer experience on a smartphone.
Things to keep in mind
You already know that there is no one-size fits all solution to lower acquisition costs. Some of the above tips might work for you, while others may not. All of it depends on your individual situation.
The most important thing is to take the time to talk with your team about these strategies. These tips can be applied whenever you have the opportunity and it is important to keep track of how your project performs.
These tips and the rigorousness of A/B testing are the best ways to reduce costs. Analyze how your project is performing and use that data to improve your paid advertising strategy. To optimize your costs and lower your CPA, you need to find the right combination of tactics.
Continuously monitoring, optimizing, and analyzing can increase profits while reducing acquisition costs. The right mix of tactics will produce quality leads faster than ever before.
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Marketing Insider Group published the post 15 Effective Ways To Reduce Cost Per Acquisition.
By: Giana Reno
Title: 15 Effective Ways to Reduce Cost Per Acquisition
Sourced From: marketinginsidergroup.com/content-marketing/15-effective-ways-reduce-cost-per-acquisition/
Published Date: Tue, 11 Jan 2022 17:00:00 +0000