Health Check Your CPA Target

The aim of any business is profitability and a loyal customer base. And of course, to boost growth and profitability by acquiring new customers. Cost per Acquisition, or CPA, is a marketing tool that is used by businesses to determine the cost companies have to bear to acquire new customers.

 

So, CPA refers to the cost per acquisition (of a new customer). It is a measure of the amount of money being spent on digital marketing efforts to attract and retain new customers. And a target CPA calculator will tell you how much you are spending, on average.

Why is CPA Important?

Understanding CPA is important for any business since the aim is to turn a profit, grow the business and invest more money back into the business..If you’re burning too much money on marketing efforts with not much ROI (return on investment) and few conversions/customer acquisitions, then your business is unbalanced and will likely not grow.

 

In order to maintain a healthy ROI and a healthy balance sheet, businesses need to know how much they are spending on customer acquisition, and also hit the sweet spot with the right target CPA number. This is why it’s important to check in on your CPA target with a health check, using a target CPA calculator.

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What is CPA Target?

Your target CPA or CPA target (or cost per install/cost per in-app action for app campaigns) refers to the average amount you’d like to pay for a conversion or paying customer. The target CPA set by you may influence the number of conversions you get. A target CPA calculator will give you an overall idea of how much you are spending and where you may need to increase or reduce spends to acquire customers/conversions.

 

When it comes to online ads, Google rules the roost. And the target CPA or CPA target is Google Ads’ Smart Bidding strategy that sets bids to help marketers get as many conversions as possible at the target CPA you have set: or, the ideal amount you would like to spend, to acquire a new customer.

 

It involves advanced machine learning to optimise bids automatically and offers auction-time bidding capabilities that customise bids for every auction.

 

So, when a potential customer runs a Google search that fits the product or service you offer, Google Ads uses your CPA target to set a bid based on the auction’s likelihood to convert. (Auction = the process that happens with each Google search to decide which ads will appear for that specific search, and in which order.)

Calculating Target CPA

First, the basics:
CPA, or cost per acquisition = Total ad costs / Total number of conversions.

 

When you calculate target CPA, you should keep in mind that Google optimises data to get as many conversions as possible within the goal you have set for the cost per acquisition. For example,if you set your CPA target as $50, Google will optimise to get as many conversions that have a CPA of $50 or less. But – this does not guarantee that your CPA is going to stay exactly at $50 since there are other factors involved that could influence that number. This is why a target CPA calculator helps.

 

Our target CPA calculator is crafted by marketers and for marketers. Whether you are trying to plan out your whole digital marketing strategy or focus on a single campaign, the target CPA calculator will make things a whole lot easier for you. You can calculate target CPA, and leave room for simple adjustments for pace and scalability. Plus, our target cost per acquisition calculator is easy to use and 100% free.