Campaign cost objectives

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Cost per acquisition jCPA)

The cost of acquiring a new customer. Typically limited to the communications cost and refers to cost per sale for new customers. May also refer to other outcomes such as cost per quote or enquiry.

Allowable cost per acquisition

A target maximum cost for generating leads or new customers profitably.

The final aspect of objective setting to be considered is the constraints on objectives placed by the cost of traffic building activities. A campaign will not be successful if it meets its objectives of acquiring site visitors and customers but the cost of achieving this is too high. This constraint is usually imposed simply by having a campaign budget - a necessary component of all campaigns. However, in addition it is also useful to have specific objectives for the cost of getting the visitor to the site using different communications tools such as search engine marketing combined with the cost of achieving the outcomes during their visit. This is stated as the cost per acquisition (CPA) (sometimes cost per action). Depending on context and market, CPA may refer to different outcomes. Typical cost targets include:

• cost per acquisition - of a visitor

To control costs, it is important for managers to define a target allowable cost per acquisition such as £30 for generating a business lead or £50 for achieving sign-up to a credit card.

To summarise this section on setting objectives for interactive marketing communications and controlling costs, review Figure 8.11.

Figure 8.11 Measures used for setting campaign objectives or assessing campaign success increasing in sophistication from bottom to top

Step 6. Step 5. Step 4. Step 3. Step 2. Step 1. Step 0.

Figure 8.11 Measures used for setting campaign objectives or assessing campaign success increasing in sophistication from bottom to top

Figure 8.11 shows different measures from least sophisticated to more sophisticated as follows:

0 Volume or number of visitors

This is usually measured as thousands of unique visitors. It is preferable to using page views or hits as a measure of effectiveness, since it is opportunities to communicate with individuals. A more sophisticated measure is reach (%) or online audience share. This is only possible using panel data/audience data tools such as www.netratings.com or www.hitwise.com.

Example: An online bank has one million unique visitors per month.

1 Quality or conversion rates to action

This shows what proportion of visitors from different sources take specific marketing outcomes on the web such as lead, sale or subscription.

Example: Of these visitors 10% convert to an outcome such as logging in to their account or asking for a quote for a product.

Cost per click (CPC)

The cost of each click from a referring site to a destination site, typically from a search engine in pay-per-click search marketing.

2 Cost (cost per click)

The cost of visitor acquisition is usually measured specific to a particular online marketing tool such as pay-per-click search engine marketing since it is difficult to estimate for an entire site with many visitors referred from offline advertising. Example: £2 CPC.

3 Cost: cost per action or acquisition (CPA)

When cost of visitor acquisition is combined with conversion to outcomes this is the cost of (customer) acquisition.

Example: £20 CPA (since only one in ten visitors take an action).

4 Return on investment (ROI)

Return on investment is used to assess the profitability of any marketing activity or indeed any investment. You will also know that there are different forms of ROI, depending on how profitability is calculated. Here we will assume it is just based on sales value or profitability based on the cost per click and conversion rate.

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