Post by account_disabled on Dec 2, 2023 10:48:51 GMT 1
excluding tax and then deduct the fixed costs. This will give you a profit before taxes (MC3), which will then allow you to adjust your target CPA as we just saw in this first example.Alternatively, you can perform calculations with a table like this to calculate an average target CPA:If you had the courage to read this table, you noticed that I differentiated between critical CPA and target CPA.In this example, the critical CPA is the CPA which gives us zero profit while the target CPA is the one which allows us to make a profit
(MC3) and therefore profitability. We estimated it by giving our Europe Cell Phone Number List selves a target ROAS of 4.This is generally how we calculate it for our clients because most often, we have a ROAS objective to meet. This is what allows us to then calculate our target CPA!Keep in mind that we tend to manage campaigns based on ROAS when we work on businesses with several products that have different margins.2.2 – Example of calculating the target CPA for lead generationThis time let's take the example of a company offering training and support in professional retraining.The purchasing process is longer than a traditional e-commerce site because you need several contacts with your customers before they commit to support. You therefore choose to
launch advertisements with the objective of generating leads.You sell this training for €2,500 and generate a gross margin (MC1) of €1,000. You want to keep a profit of €500. You therefore agree to devote €500 to the sale of training. This is your target CPA.However, you are optimizing your campaigns to generate leads and it is obvious that not all of your prospects are going to buy the training. Only some of them will complete the transaction.Let's imagine for example that historically, 10% of your prospects end up purchasing the training, your target CPL will then be €50 (=€500*0.10).3) How to calculate an advertising budget based on the target CPA?I hope you're still here after this little math session!We now have to calculate our target
CPA. How about calculating a forecast advertising budget to invest on Facebook (or another advertising platform)?For this, I offer you a 3-step formula:Volume : What is the turnover that you would like to achieve in a given month with advertising?Income : How much does a conversion earn you on average? This is the average shopping basket.Cost : What is the maximum acquisition cost you are willing to spend?As with the previous point, I suggest you do some calculations for an e-commerce business and a second one focused on generating leads.3.1 – Calculation of an advertising budget for an e-commerce:For the sake of
(MC3) and therefore profitability. We estimated it by giving our Europe Cell Phone Number List selves a target ROAS of 4.This is generally how we calculate it for our clients because most often, we have a ROAS objective to meet. This is what allows us to then calculate our target CPA!Keep in mind that we tend to manage campaigns based on ROAS when we work on businesses with several products that have different margins.2.2 – Example of calculating the target CPA for lead generationThis time let's take the example of a company offering training and support in professional retraining.The purchasing process is longer than a traditional e-commerce site because you need several contacts with your customers before they commit to support. You therefore choose to
launch advertisements with the objective of generating leads.You sell this training for €2,500 and generate a gross margin (MC1) of €1,000. You want to keep a profit of €500. You therefore agree to devote €500 to the sale of training. This is your target CPA.However, you are optimizing your campaigns to generate leads and it is obvious that not all of your prospects are going to buy the training. Only some of them will complete the transaction.Let's imagine for example that historically, 10% of your prospects end up purchasing the training, your target CPL will then be €50 (=€500*0.10).3) How to calculate an advertising budget based on the target CPA?I hope you're still here after this little math session!We now have to calculate our target
CPA. How about calculating a forecast advertising budget to invest on Facebook (or another advertising platform)?For this, I offer you a 3-step formula:Volume : What is the turnover that you would like to achieve in a given month with advertising?Income : How much does a conversion earn you on average? This is the average shopping basket.Cost : What is the maximum acquisition cost you are willing to spend?As with the previous point, I suggest you do some calculations for an e-commerce business and a second one focused on generating leads.3.1 – Calculation of an advertising budget for an e-commerce:For the sake of