When to Use Cost per Conversion (CPA) as an Adwords Metric?

Also known as cost per acquisition, this metric isn’t always the best way to measure your Adwords campaigns. This might sound contrary to popular belief, however, it’s simply logic that’ll tell you that if you have a campaign that sells consumer goods with prices ranging from $10 to $1,000, it’s easy to see that a CPC of $10 for the $1,000 products is extremely successful but not for them items with $10 price tags.

When’s CPC a good measure of success then? If you ask me, CPC would be a great measure if the campaign’s product or service is price around the same range. This is the reason why it’s also a good strategy at times to create Adwords campaigns based on price but of course if you have tens of thousands of prices to deal with, this might not be the most efficient strategy.

For the latter case, I would rather use the Cost/Total Conversion value metric. This answers the question of how much Ad spend you need in order to make $1. Say your Cost/Total Conversion value is 0.001234, this means in every 0.001234 of Adwords spend you incur, you gain an actual sale value of $1. So if you’ve earned $10,000 in any given time, that means you’ve only spent a little over $12!

Using this metric will eliminate the price factor of your campaigns rather focusing on the answer to the question, “Am I getting money from my campaigns or losing more money”?

Of course this metric highly depends on a good conversion tracking integration. If we don’t have this done accordingly, the accuracy of our Adwords data can become rather useless.

So if you’re business is running Adwords campaigns, don’t just rely solely on the CPA as a measurement of success. Rather, ask the question if you’re making more money or losing more from your campaigns and find out the answer using the tons of data built-in in Adwords.