What is Blended CPA?
CPA — or Cost per Acquisition — is the total cost of acquiring a customer, either through paid or organic channels. The calculation is as simple as dividing the total number of newly acquired customers by the total paid media spend, across all channels. For example, a way to account for CPA is to take all the new customers that purchased from your Shopify store and the the total dollars spent across Facebook, Google, Snapchat, Pinterest, etc.
Why to measure Blended CPA?
Blended CPA provides the best holistic approach to quantifying how well your business performs, inclusive of store and paid media efforts. It showcases that you can quantify the role paid marketing channels play towards increasing new customers against non-paid (organic) channels. In turn, that decreases the assumptions made that organic channels will grow irrespective of paid media spend.
When is the Blended CPA the right metric to optimize?
- You want to acquire as many customers at a fixed cost (maximum CPA) in an effort to keep profit margins.
- You have diverse set of products and you don't offer at the same value. Optimizing CPA is common for ecommerce brands where order values are unpredictable and utilizing CPA is a straight-forward way to measure performance.
What are ways to lower my Blended CPA
1. Leveraging landing pages
In ecommerce, its a common strategy to build - and test - a series of landing pages based on products, categories, and CTAs (call-to-actions). By testing, tweaking and learning you can ensure effective landing pages that increase conversion and lower CPA.
2. Testing your bidding strategy
The obvious way to decrease CPA is to maximize (increase) conversions but that process is not as straight-forward. Instead, you can configure bidding types in your platform that best reflects your budget and campaign needs. The (2) major ways in Facebook include Average Cost Bidding and Maximum Cost Bidding. By testing each of these bidding types against each other, you can find underlying patterns to help decrease CPA and drive optimization.
3. Building audience segments
Testing audience segments is another strategy to decrease CPA. A huge opportunity to do so is through Custom Audiences and Lookalikes. For instance, building custom audiences aimed at retargeting high-value customers is a good place to start. No matter your type of product or service, testing various audiences can help find specific audiences where advertising dollars are most effectively spent.
When it comes to measuring the true cost of acquiring a new customer, you need to take into consideration both the organic and paid channels that are contributing to the outcome. Utilizing Facebook Ads or Google Ads for performance tracking, won't give you the full picture and it takes a combination of where your customers are purchasing (your store) and where they are getting served up advertising (your channels). Also, knowing the ways to optimize your CPA through various strategies, will allow your dollar to go further by testing what works on who and when. Most importantly, you need to be able to track the performance of this metric continuously. You can't do so efficiently in each platform separately. With rubix, you can combine platform data to get a complete view of CPA performance. Instead of stitching it yourself or committing to the cost and complexity of building a data stack from scratch, get one instantly with rubix. Learn how you can get instant dashboards, reports and data exports across all your critical performance drivers, start your free (no credit card required) 30-day trial here: https://www.rubix3.app/sign-up-complete.