CPO, or customer acquisition cost, is one of the key performance indicators for marketing activities. In relation to marketing on Google, CPO represents the value of the cost of acquiring one customer from Google’s advertising channels. In the article below, we explain what CPO is and how to calculate it, as well as why it is so important in monitoring and optimising advertising campaigns.
What is CPO?
CPO is the cost of acquiring one customer. It means how much money you have to spend to get one new customer. In the case of Google Ads, CPO measures how much it costs to acquire one new customer through Google’s advertising channels, such as Google Ads, Google Shopping, YouTube Ads, etc.
How do you calculate CPO?
Calculating CPO is fairly straightforward. Simply divide the total cost of the advertising campaign by the number of customers acquired. For example, if you spent £1,000 on a Google Ads campaign and acquired 10 new customers, your CPO is £100.
Why is CPO important in Google Marketing?
CPO is one of the most important performance indicators for advertising campaigns in Google Marketing. It allows you to measure the effectiveness of the money spent and to monitor and optimise your campaigns to increase the number of customers acquired at the lowest possible cost.
With CPO, you can quickly find out whether an advertising campaign is profitable or whether you need to make changes to your advertising strategy. If the CPO is too high, it means that the cost of acquiring one customer is too high in relation to the value the customer brings to the company. If this is the case, you should optimise your campaign or choose other advertising channels.
How do you optimise CPO in Google Marketing?
Optimising CPO in Google Marketing first and foremost requires continuous monitoring and analysis of the results of advertising campaigns. There are various ways to reduce CPO, such as:
- Choosing the right audience – a good way to reduce CPO is to target ads to a more interested audience with a higher propensity to buy.
- Changing your advertising strategy – if your CPO is too high, you should rethink your advertising strategy and make changes to reduce costs and increase the effectiveness of your ads.
- Keyword optimisation – choosing the rightkeywords can help you reach a more interested audience and thus lower CPO.
- Improving the quality of landing pages – landing pages should be optimised for conversions, which will increase the effectiveness of ads and lower CPO.
- Testing different versions of ads – testing different versions of ads can help to find the optimal strategy and lower CPO.
CPO is an important indicator of the effectiveness of advertising campaigns in Google Marketing. It allows you to measure the effectiveness of the money spent and to monitor and optimise your campaigns to increase customer acquisition at the lowest possible cost. CPO optimisation requires continuous monitoring and analysis of the performance of advertising campaigns and the use of various strategies, such as selecting the right audience, optimising keywords, improving the quality of landing pages and testing different versions of ads. In this way, CPO can be significantly reduced and the effectiveness of advertising campaigns can be increased.