Questions

How can I accurately calculate my customer CPA when relying on UTM parameters to track different advertising channels?

The best way I could come up with to track my advertising spending and see which advertising channels bring me the lowest customer cost-per-acquistion is using UTM parameters in all my advertising links and saving these values in my database that I can then run reports from. This seems to work good but I'm sure it's not 100% accurate because for example I'm sure there is traffic that is coming from my advertising methods like Google Adwords that for some reason (cleared cache) doesn't allow the UTM parameter to saved properly. As an example, based on the data I collected from my UTM parameters it shows me that my customer CPA is the following: Adwords UTM Traffic: $65.00 CPA All Traffic Including Adwords & Non-UTM Traffic: $30.00 CPA Based on my customer LTV calculations anything less than < $30.00 CPA is an amount I can work with. So my question is when I calculate my customer CPA, should I be calculating this value looking it as all traffic coming into my website? Or should I be looking at just the advertising channel data I was able to capture using my UTM parameters? Based on my example above, if I were just looking at the data I was able to capture with my "Adwords UTM Traffic", the CPA is double what it should be; which is not good! However, looking at all my traffic does make the CPA align up properly to what I can and should be spending to acquire a new customer. Thank you!

2answers

You should be looking at both your overall CPA from all sources and also CPA for each individual source. Your goal should be to get the most out of every dollar you're spending on your paid advertising campaigns, which means figuring out which channels give you the most ROI and putting more budget toward those.

In other words, if your Adwords campaigns have a very high CPA, that's making your overall CPA higher than it needs to be. Because your overall CPA here is $30, that indicates that you have other channels that have a CPA much lower than that. If you focus your efforts on those channels, you should be able to bring your overall CPA down.

That said, your non-UTM traffic may be coming primarily from organic search (ie you're not paying for it, so it brings down your CPA to include this traffic in the calculations). You could choose to focus on SEO, but I'd also recommend calculating CPA for all the channels you do have UTM parameters for so you can see how everything compares across the board before deciding where to focus your efforts & budget.

Hope this helps - let me know if you'd like to discuss further!


Answered 5 years ago

Hi,

It really is necessary to take a look at your current system to get to the bottom of it, but one possible issue is duped conversion data. An example of this would be tracking Facebook ads, Google Adwords and organic conversions, tracking these out of the platforms themselves you may have them all reporting a conversion at the platform side. If you compare this to a de-duped view either through attribution modelling out of GA or another view, then you would get a different picture of CPA.

It becomes more difficult as you start to use display and remarketing advertising as well, so these may be factors at play.

The other option is just the way the tracking is fired, GA will have variance to Adwords, to DoubleClick etc. even though they are all Google platforms, it's just the way it is.

As with all things tracking, it's about understanding there will be variance, but putting in place measures to reduce it, we call it "being less wrong". At the moment you have +/- 100% which is obviously not acceptable, but a few measures in place to get one source of truth with +/- 10% would probably be completely acceptable.

Happy to schedule a call if you'd like to discuss this in more details.

Cheers,
Mike


Answered 5 years ago

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