Managing against CPA or ROAS? The one thing you need to know...

Published on 15th Apr 2013 in News

Do all my products/services have the same £ value?

If not, then a ROAS model is the only way to effectively manage your campaign. For example, if your product range runs from £1 - £100 there is no blended CPA that will maximise the opportunity for both £1 products and £100 products. Even basing a CPA from your average order value (AOV) will lead you to be too aggressive at £1 and not aggressive enough at £100.

There are some third-party bid management tools that allow you to bucket keywords into different groups with different CPA targets but this is a labour-intensive process. For large multi-product campaigns, it is also difficult to facilitate, and it won’t help with campaign management decisions outside bid management.

Businesses often stick with a CPA model rather than moving to ROAS because of their tracking. However there are plenty of tracking solutions that allow you to track transaction types and there are also dynamic transaction values including Google Analytics, and both MSN and Google Adwords.  Tracking should never be used as an excuse for not moving to ROAS.

It is not complicated to get to grips with what ROAS % to set as your target, and it can be just as easy to achieve as deciding what your CPA target should be. For instance, look at your total PPC revenue/current ad spend for example £100,000/£50,000 = 200% ROAS - is it good or bad?

At the least, your revenue should be higher than your spend. If it’s not then you should probably fire the person running your PPC campaign!  Assuming your current ROAS is positive and you're happy to continue at that level, what is a realistic improvement to make?

Once you have the answers to these simple questions you are ready to bid manage against the return each keyword delivers regardless of the product/service value.

That’s a great first step and certainly an improvement from a blended-CPA approach based on AOV. Remember, though, it is possible to take the ROAS model beyond mere bid management.

If you'd like to discuss your options in moving from a CPA approach to a ROAS model, just pick up the phone and talk to one of the team at Infinity Tracking. We'd be happy to talk you through the advantages and options, so that you can come to the model that does best for your business.

Senior Digital Marketing Manager

Alex Worth
Senior Digital Marketing Manager

Digital marketing enthusiast at Infinity and when not at work is kept on her toes by two cheeky little boys.

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