Monday, July 6, 2015

How to Track Online Marketing ROI Using CPA?

The Cost per Action Analysis is a good way of tracking your online marketing Return on Investment [ROI], and it’s a much better way than page views, impressions, clicks, etc. The advertising medium over the web is slated to grow by about $10 billion in the coming 5-6 years, so it becomes important to appreciate the effectiveness of such huge spending. If you are unable to measure what results you are getting with ad campaigns, it doesn’t make any sense undertaking them, and ROI is the best way to measure the results. Sadly, most of the businesses fail to get a grip of their objectives of marketing. The basic principles have not changed, though the tools of marketing have. So if your objective is to get more sales, you need to measure the cost of each sale that you make for determining your ROI.

It’s good for the advertisers that tracking the ROI for online advertisements is easier than tracking it for mediums like radio, television, newspaper, etc. In online marketing, the ad campaigns can be tracked down to each denomination of money spent on it. This is the main reason why the money spent on online advertisements is only going up with every passing day.

Why is it better than Cost per Impression [CPM] or Cost per Click [CPC]?

For tracking the effectiveness of a campaign, most businesses consider the statistics revealed by CPM and CPC. The only fact that they fail to consider is that for most of the businesses, the impressions and clicks hardly help you in earning money. So by relying on these, you might not exactly be tracking your ROI. The same goes for page stats as well. Impressions, clicks, page views, etc. are not an end itself; they are, in fact, just means to an end. If they don’t result in more sales, all expenses spent on them are useless. If you earn money from the sales, you need to correlate the costs and sales. So you need to measure the Cost per Action [CPA].

In a CPA campaign, an advertisement is run online on a third-party website, who generally charge commission if you can get sales through that ad. So it is purely based on performance. It entirely means that the risk lies with the publisher as he would get a commission only if the views are converted into sales. Affiliate marketing is the most widely used CPA strategy. It will help you in determining what kind of actions will reward you and how much you would be willing to pay for each action. Like, if you engage a third-party site for sales promotion, they can get a commission only if sales are generated by them. The CPA in such a case would be the cost for every lead generated, or simply the cost per sale.

Conversion Tips

The tips mentioned below would help you in planning you CPA campaign, and will keep you away from some general mistakes.

1. How is the recording of sales and leads done?
Conversion means the generation of sales. If the sale is recorded online, it can be measurable. So sales can be chosen as the action in the CPA campaign. Based on what you want to achieve through the campaign, you can measure other outcomes as well, like subscription to newsletters, download of software, etc. The campaign results can be viewed in real time.

2. Setting up a landing page for capturing details of lead contacts
If your aim is the generation of leads, you need to be aware of when a lead is generated. A lead becomes a lead only when the customers provide their details like name, email address, etc. So a landing page needs to be created for getting those details from them.

3. Your CPA provider can set up the landing page
If you are running short of time, resources or even the inclination to set up the required forms and build a database on your website, you can request your CPA provider to do so on their server. They would collect all the leads and calculate the stats. This is the best option for most of the businesses since it saves time and money.

4. Find a trustworthy CPA provider
If you are to entrust the CPA provider with the task of collection of leads and calculation of statistics, be sure that they are trustworthy. A trustworthy CPA provider would find out your needs, and they would research your niche market over the internet. By doing so, they would be able to estimate how much business they can generate for you in a given time frame. If they claim that they cannot provide you with such details, you can be rest assured that they are not professional online marketers.

5. Avoid huge fees
There are some CPA providers who charge setup fees and/or high network fees of over 20% for every sale or lead they generate. Prior to selecting them, make sure that you are getting your money’s  worth.

6. Measuring conversion rate
You can divide the total cost for each ad campaign by the total conversions received from each of them, for measuring the CPA. If the online ad campaign costs $500 with the generation of 20 leads, the CPA would be $25.

7. Improving the conversion rate
The conversion rates depend on a lot of factors like the interest level of the visitor, the attractiveness of the offer, and the ease in which an order can be processed. So make sure that these factors are taken care of. They will invariably increase your conversion rate.

To conclude, since with CPA you can identify with accuracy, the cost you would have to incur for acquiring a customer, it eliminates any kind of guesswork. You can calculate your ROI with precision. Also, since the online tools and technologies permit you to keep a real time track of the effectiveness of your ad campaign, you can adjust even those campaigns which may still be running. If you can be an expert at effective web campaigning, you’ll save a lot of implementation costs and get a high ROI in return.

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