18

Apr

By Dennis R. Mortensen
3 comments
Beyond basic Cost Per Action (CPA) measurement – looking towards CPnA (Post 1/2)
Cost Per Action (CPA) can be defined within the following capacity; “An advertiser that only pays for an advertisement when an action has occurred. An action can be a product being purchased, a form being filled, etc. The desired action to be performed is determined by the advertiser.” – and thus calculated as follows:

CPA = Total Cost of Advertisement / Number of Actions

As an example; let me set up a simple Custom Report to show us the result from an IndexTools retailer, where the Action is “Sale” and the campaign cost is from paid search:

Where you see that on 8th April we have a SALE CPA = $12.27 ($3,117.35 / 254)

As another example; setting up the same simple Custom Report to show us the results from the same IndexTools retailer, but where the Action is “Email a Friend” and the campaign cost is from the same paid search campaign:

Where you see that on 8th April we have a Email a Friend CPA = $135.53 ($3,117.35 / 23)

This is all good and well when looking at basic Cost Per Action (CPA) measurement. However; we cannot expect that:

  • Retailers only have “SALE” as a successful action for CPA measurement
  • Retailers have single independent actions
  • Campaign clicks result in only one positive action
We must expect that most retailers have multiple valuable actions that can all occur within the same campaign visit. That said – the “picture” looks different if I show both at the same time:

Where you notice that the total campaign cost on 8th April (rightfully so) stays at $3,117.35 – BUT more exciting is that we still have:

  • SALE CPA = $12.27 ($3,117.35 / 254)
  • Email a Friend CPA = $135.53 ($3,117.35 / 23)
I think you see the problem. That I could add in the other 25 something actions that this retailer measures – and in the end the total cost of all CPA combined would be greater than the total campaign cost. Not even that, in sessions where we have multiple positive valuable actions, the CPA for the individual positive actions is not decreased/changed.

I call this challenge: Measurement of CPnA

This is crucial in Affiliate Marketing – which is ALL about Conversion Tracking (Action tracking) – so now comes the question about how to solve or deal with this challenge. Which is now ever more important with the launch of e.g. Google Pay Per Action (PPA), which essentially is a standard affiliate Cost Per Action (CPA) marketing program. I will deal with this is my next post: “Beyond basic Cost Per Action (CPA) measurement – looking towards CPnA (Post 2/2)”

I would love to hear what some of you guys are doing about this fun challenge? – even if you just discard this fact and do not think it holds the same weight as I.

  • Wayne

    All actions are not created equal!

    At Fuscient, we’ve developed a good solution for analyzing CPA. We classify actions into the following categories.

    1) Direct sales
    2) Lead generation
    3) Transactional
    4) Branding

    We then analyze CPA trends for each of these categories. This gives us a better picture of how marketing spending is impacting various aspects of our client’s web sites. By looking at trends over time, we can see the effect of our efforts to improve their marketing campaigns.

    It’s not a perfect solution, but it’s the best we’ve come up with so far.

  • Dennis R. Mortensen

    Hi Wayne,

    This is not a bad idea at all! – I have actually been directing people to this answer when debatted so far.

    Thanks for the comment..

    Cheers
    Dennis

  • Martin Omander

    Hi there,

    I really liked this blog post. I am battling the question of how to measure CPAs for multiple actions all the time. Was there ever a part 2 to this blog post?

    Keep up the good work!

    /Martin