CPA AdWords concept
What is CPA AdWords?
The AdWords CPA is one of the different types of quotes in digital marketing. Unlike other modalities such as CPC (Cost per Click) and CPM (Cost per 1000 impressions), in CPA the advertiser only pays for each sale that is made.
In general, commercial promotion is paid based on an estimate of the amount of sales that we can get thanks to the campaign. In the case of CPC, you pay for each click that users make on an ad, which, despite everything, does not guarantee 100% that this will allow us to achieve a sale. In CPM, a fixed price is paid for every thousand impressions of an ad, something more similar to traditional commercial promotion.
What is CPA AdWords for?
The CPA aims to keep tighter control of expenses associated with business promotion, ensuring that you only pay for each sale made, which, well done, ensures that the ads in which you invest produce results.
A typical case of CPA is affiliate programs, where a commission is paid on each sale to independent advertisers to promote the company's products. It is a great way to guarantee investment, even though, unlike the more commonly used methods, there must be a very good calculation of the profit that will be achieved with each sale of the products that are promoted, so that the CPA is not greater than the profit.
In the case of the AdWords CPA, Google offers us a modality based on CPC, but that defines a maximum price for the bid, based on the cost of each click divided by the number of conversions that we hope to get for that price. To do this, the conversions obtained throughout a CPC campaign must be previously tracked so that the Google algorithm can establish the average cost of each conversion.
Examples of CPA AdWords
Our business promotion service in AdWords uses CPA budgets where it can be implemented. You can consult our success stories to learn about some successful campaigns that we have developed using this modality.
We can put, for example, that we want to do commercial promotion of an online store based on CPA. Putting, for example, that each order has an average price of € 100. To calculate the CPA we will have to deduct all the costs such as the price of the product, shipping, VAT and any other factor. If after discounting all this, there is a profit of about € 30, we will have a net profit of 30%.
If you expect to make a profit of 20% from each sale of your products, then the final cost of the CPC should not be more than € 10, that is, the 10% of the final price of the sale.
Learn more about CPA AdWords
If you have doubts about how the CPA works in the Google AdWords search engine, you can visit our blog, where you will find a large amount of relevant information. You can also take a look at these two posts to learn a little more about this type of commercial promotion:
