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What would be recommended CPA of 2nd Campaign?

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hi Everyone....

 

I got this tricky question in one of my recent interview. 

Please explain how to solve!!!

Q. Account has 4 campaigns with CPA of 50$, 78$, 101$, 23$. You have to bring down the CPA by 20% for campaigns with the CPA higher than the avg CPA. What would be recommended CPA of 2nd campaign?

 

Thanks

Muzakkir

1 Expert replyverified_user
Marked as Best Answer.
Solution
Accepted by topic author Mohd M
July 2016

Re: What would be recommended CPA of 2nd Campaign?

Follower ✭ ✭ ☆
# 2
Follower ✭ ✭ ☆
avg CPA = (50+78+101+23)/4=>63
recommended CPA campaign 2 - $78*.8 = $62.30
receomended CPA campaign 2 < avg CPA
profit

Re: What would be recommended CPA of 2nd Campaign?

Top Contributor
# 3
Top Contributor
This is an elegant solution - on the surface... however, there is not enough information in the question.

The average CPA's can only be added and averaged out if there are the same number of conversions in each campaign - or am I missing something....

If, for example, there is one conversion in each of the first 3 campaigns, and 1,000 conversions in the 4th then the average CPA will be close to $23

So my answer would have to be that you cannot work this out without knowing the conversion volumes. The CPA is already an average - simply working the average of the averages do not give you the true average cost of your conversions.

I could try and elaborate on the maths but my brain is hurting already....

Re: What would be recommended CPA of 2nd Campaign?

Follower ✭ ✭ ☆
# 4
Follower ✭ ✭ ☆

 

 

Some KPIs by link, but question based on CPA only, so I think my prev. answer more clear

 https://gyazo.com/63e288815958928fb5be02f91b6996b6

Re: What would be recommended CPA of 2nd Campaign?

Visitor ✭ ✭ ✭
# 5
Visitor ✭ ✭ ✭
Thanks for your response.
Have a look on this and correct me if i am wrong.

avg CPA = (50+78+101+23)/4=>63
bringing down the CPA by 20% for campaign 2=>$78-($78*0.2)=>78-15.6=>62.40
recommended CPA of campaign 2 < avg CPA