CPA

CPA is ad spend divided by the number of actions. You decide what counts as an action. For a hairdresser it might be a booking, for an accountancy firm a completed contact form, and for an online store a purchase. The point is to measure something that resembles money in the till, not just traffic.

The number that says whether ads pay

CPA answers the question of whether your ads are profitable. A campaign with expensive clicks can have a low CPA if many of the clickers get in touch. A campaign with cheap clicks can have a sky-high CPA if nobody does. CPC alone does not tell you which one is better.

You also need to know what a customer is worth. If you earn NOK 4,000 on a typical job and want to spend a fifth of that on winning the customer, your limit is NOK 800 per customer. If you sell goods at NOK 300, it is far lower.

Watch what you divide by. If you count completed forms, CPA is the price per enquiry, not per customer. If one in five enquiries becomes a customer, the limit becomes NOK 800 divided by five, which is NOK 160 per enquiry.

How to find your limit

Write down what a new customer brings you in profit, not in revenue. Decide how much of that you are willing to spend on winning the customer. That is your maximum CPA per customer. If you measure enquiries, multiply the limit by the share of them that become customers. Then set up conversion tracking in your ad account, so you can see whether you stay below it.