Note: This blog was updated November 2024.
Google search ads are a great way to generate B2B leads. But most companies spend way more than they need to. In this post, we look at a digital marketing metric that can help you spend efficiently: cost per acquisition.
Cost Per Acquisition: Why You’re Overspending On Google Search Ads
Did you know that digital marketing would involve math? I certainly didn’t.
Math is not the reason I got interested in digital marketing. In fact, it would be more accurate to say that math is the reason I don’t get interested in things. And I’m saying that as the child of a math teacher.
Regardless, math is the reason we’re here. Because today we’re going to talk about an equation that can open up a world of possibilities for your business. One where you can generate more leads without spending more money.
I’m talking about cost per acquisition.
What is Cost Per Acquisition?
CPA is a measurement of what it costs you to acquire a customer. It is calculated by dividing total spend by the number of leads your ad campaign collects.
So if you spend $2,000/month on Google search ads, and if those ads drive you 20 leads per month, your cost per acquisition would be $100.
$2,000/20 = $100
But what is a lead? After all, organizations tend to define the word differently.
For some, it’s a qualified prospect ready to be handed off to sales. For others, it’s a phone number or an email. For our purposes, a lead is the contact information you collect because a prospect took some kind of action on your website or landing page, like requesting a demo, signing up for a newsletter or downloading a white paper.
Why Does CPA Matter?
Cost per acquisition is an important metric to be aware of if you rely on digital marketing channels to generate leads.
It’s the easiest stat to understand (“this is what each lead cost me”), and the most impactful one to optimize.
Reducing your cost per acquisition, and keeping it low, will allow you to get more out of what you’re already spending.
Other metrics are important, too. But CPC, CTR and CR are meaningless for people who don’t work in the digital marketing department. You know this if you’ve ever had to present campaign results.
If you want your boss’ attention, tell her how much she’s spending to get a lead.
Who Should Care About CPA?
If you care about digital marketing, you should care about CPA.
But who should really care?
Any business that has digital ad campaigns that are currently driving leads.
If your landing pages have yet to convert, CPA is a non-entity for you. But if you’re collecting a healthy number of leads through digital ads on a regular basis, you can’t afford to ignore CPA.
How Do I Lower CPA?
Optimizing CPA is an ongoing process. One that requires continuous checking, tracking and changing. To keep it simple, I’ve narrowed down the actual process to three elements: targeting, ads and landing page.
1. Optimize Your Targeting
Spotting negative keywords and overly broad match parameters can help you optimize the quality and efficiency of your keywords.
Close to 75% of all search campaigns waste money because of poor keyword targeting. Most of this is caused by including unnecessary keywords or relying too much on broad match keywords.
As a result, you get clicks from searches that have nothing to do with what you’re offering. This is a problem if you’re trying to lower your cost per acquisition.
Make sure to track keyword quality on at least a bi-weekly basis by identifying negative keywords and looking for opportunities to turn broad matches into more exact ones.
(Wordstream makes this super easy, by the way.)
2. Optimize Your Ads
Lowering your average CPC can help you optimize the quality of your ads. The quickest way to do this is with responsive search ads. (Forget traditional A/B or MV testing.)
Responsive search ads let you add multiple headlines and pieces of body text to a single ad. Machine learning tweaks the order in which they appear, optimizing for clicks and conversions.
You’re smart. AI is smarter. Yes, you can run traditional expanded search ads, too. But responsive ads in single-keyword ad groups are the best you’ll do for hyper-targeting.
3. Optimize Your Landing Page
Increasing your conversion rate means you get more from every click. This is a little harder than optimizing an ad, but there are a number of best practices and tools that can help.
Most modern landing pages have a few things in common.
Some are obvious: Features, benefits, a solid offer and a clear call to action. Some are less obvious or can be harder to come by: social proof and pricing information.
If your landing page isn’t converting, it’s likely because you’re missing a few of the above elements. Can’t do it yourself? Use Smart Traffic in Unbounce to, once again, put the robots to work for you.
Ways | Action |
1. Targeting | – Regularly review and refine keywords to eliminate negative and overly broad matches. |
– Utilize tools like Wordstream to track keyword quality and optimize match types. | |
2. Ads | – Use responsive search ads to allow for multiple headlines and body text variations. |
– Embrace machine learning to optimize ad performance for clicks and conversions. | |
3. Landing Page | – Ensure landing pages include features, benefits, clear offers, and a strong call to action. |
– Incorporate social proof and pricing information to enhance credibility and trust. | |
– Utilize tools like Unbounce’s Smart Traffic to automate optimization based on performance. |
What Happens When I Lower My CPA?
If you take the above steps to ensure your targeting, ads and landing pages are in order, your cost per acquisition will start to decrease. But lowering it is just the beginning.
Now, you need to keep it that way. And if you can keep up the good work for six months to a year you’ll see demonstrable ROI.
Examples of Cost Per Acquisition Optimization
In the last month alone, Altitude reported serious decreases in CPA for two clients. These resulted in massive hidden savings.
The first client’s CPA dropped 33%, saving them roughly $37,000 over a year. The second client’s dropped 63%, saving them around $43,000 in a year. The reason they saved that much money is because that’s what each would have spent to acquire the same number of leads at their previous CPA.
Closing Thoughts
Cost per acquisition is a North Star for digital marketers – especially those in the lead generation game. You should base your strategy around it and obsess about how low you can possibly take it.
If you don’t, your business will easily spend thousands of dollars it doesn’t have to.
