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How to Calculate approximate CPA while planning for Budget?

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Can anyone please help me, how do i calculate an approximate CPA value for any PPC Project as client ask for this without running the Campaign?

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Marked as Best Answer.
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Accepted by MosheTLV (Top Contributor)
October 2016

How to Calculate approximate CPA while planning for Budget?

[ Edited ]
Participant ✭ ✭ ✭
# 2
Participant ✭ ✭ ✭

Estimating CPA's before running a campaign is treacherous territory.  You are gambling both on guessing the cost per click, which is a function of quality score and competitive bidding; and the conversion rate which depends not only upon the campaign but upon the efficacy of the landing page, buyer psychology, and the phase of the moon. 

 

If you assume responsibility for producing a certain conversion rate, then in addition to assuming responsibility for producing a properly designed and implemented AdWords campaign, you may have inadvertently also assumed responsibility for business model risk.  I try to leave that where it belongs: with the campaign owner. 

Best to provide industry norms, but simply the truth: CPA is usually unknowable without actually running at least a modest test campaign.

 

View solution in original post

Marked as Best Answer.
Solution
Accepted by MosheTLV (Top Contributor)
October 2016

How to Calculate approximate CPA while planning for Budget?

[ Edited ]
Participant ✭ ✭ ✭
# 2
Participant ✭ ✭ ✭

Estimating CPA's before running a campaign is treacherous territory.  You are gambling both on guessing the cost per click, which is a function of quality score and competitive bidding; and the conversion rate which depends not only upon the campaign but upon the efficacy of the landing page, buyer psychology, and the phase of the moon. 

 

If you assume responsibility for producing a certain conversion rate, then in addition to assuming responsibility for producing a properly designed and implemented AdWords campaign, you may have inadvertently also assumed responsibility for business model risk.  I try to leave that where it belongs: with the campaign owner. 

Best to provide industry norms, but simply the truth: CPA is usually unknowable without actually running at least a modest test campaign.

 

How to Calculate approximate CPA while planning for Budget?

Participant ✭ ☆ ☆
# 3
Participant ✭ ☆ ☆

Steve is right. My advise is to tell your client you can't give them an exact figure and it depends on:

 

- The keywords they are bidding on

- The location they are targeting

- The amount of competition

- How their campaigns are set up and then run

(having properly managed campaigns will help lower their CPA over time)

- The quality of their landing page or website

- Plus other factors

 

Provide them with an average CPC, suggested budget and the CPA average for their industry which can be found here (roughly): 

 

http://www.wordstream.com/blog/ws/2016/02/29/google-adwords-industry-benchmarks

 

How to Calculate approximate CPA while planning for Budget?

Explorer ✭ ☆ ☆
# 4
Explorer ✭ ☆ ☆

Hi Sam,

 

If you have other client campaigns running on same set of keywords or closely related to this client business, then you can have a idea about that conversion rate and cpc they are getting and based on this client budget, you can do reverse calculation to find out about CPA.

 

Or if ur client is new and you can do a keyword research on what cpc you are getting, and client budget required and based on conversin rate of 0.5% or 1% you can figure about CPA you are going to get.

 

Let me know if you need more help

 

Regards,

Manish