Why CPA is an outdated measure of paid search

Branding Design
Design Strategy
Digital Strategy
B2C - Brand Strategy

The paid search landscape has changed dramatically in recent years. The rise of mobile search, video consumption, social media channels and, ultimately, people-based marketing has meant there is a growing pressure for advertisers to be everywhere their audience is, and not just on that final Google search.

Last year, digital ad spend recorded growth of 14.3%, up to £14.5 billion. This is the eighth consecutive year of growth, and it's forecast to continue for the next two years at least. Professional services company, RPC, showed revenue from the top 20 online only retailers increased by 23% last year. Online-only retailers are fast building strong brands and consuming more and more market share, which has not only meant the pay-per-click landscape is now more saturated than ever, but our consumers are literally swamped with choice.

The key to building a strong brand is to be present at every stage of the funnel, from awareness, right through to when someone is ready to take action. Upper funnel activity has become much more accessible via paid media over the past few years, and equally as measurable too.

As marketers, that's really exciting. We love branding, it's a chance for us to get creative. It enables us to get you the right audience, help you compose the right message, and give you the right platform to target those people on. However, when proposing upper funnel activity, we’re often met with questions, like: "What will my CPA bet?” Or: “What's my ROI on that campaign?"

So, the question is: "Should we be measuring upper funnel activity on CPA? Should every piece of activity we do be evaluated in the same way by default?"

Another way

Patagonia is an outdoor clothing and apparel brand, who supply gear for things like skiing, trekking, climbing, and other outdoor pursuits. The video above was Patagonia's first ever television advert, and it was aired just days before the Trump administration debated the downgrading of 27 national monuments, two of which have already been affected.

In the video, the brand spent nearly $700,000 to not advertise their products. There's no mention of stores, sales nor discounts. Apparel is probably the least noticeable thing in this video.

For Patagonia, it appears the aim was to air their brand values, which in turn resonate with their target audience. If, for example, you were a passionate trekker and buying from Patagonia meant you were supporting the protection of national monuments, it might seem a no-brainer to buy from them over a competitor who didn't have a stance at all. Ultimately, an uplift in sales is a knock-on effect for a campaign like this, but by no means at its core.

How did Patagonia measure success? By the number of texts they received? Probably. Was the uplift in sales in the days following the ad airing attributable to the advert? That’s harder to say.

CPA and ROI remain important as overall success metrics; however, having a more holistic approach to your marketing spend versus the return may give you a clearer picture of what your marketing efforts are achieving for you.

Going back to the funnel, it makes sense to allocate a CPA to those ready to act. However, to allocate the same CPA to those in the awareness stage is difficult, and, arguably, it's incorrect to value these two at the same price, as their intent differs significantly.

GA tools

In an ideal world, businesses would have their own custom-built, data-driven attribution model to track and decipher upper funnel activity. In reality, Google Analytics offers a couple of reports that can help do this.

A great place to start is the assisted conversions report, which provides a breakdown of assisted conversions by channel you can compare to last click conversion. Google will, however, stack the revenue in this report, so if someone lands via paid search, then goes through direct and converts on organic, say for a purchase of £10, Google will attribute £10 to each of those channels.

The top conversions path report helps you visualise how a channel can impact another. If you're using UTM parameters correctly, you can go even more granular, for example, to see how Facebook campaigns impact organic traffic or investigate how a display campaign for Black Friday had an impact on paid search.

Finally, the model comparison tool is great for comparing a last click attribution model to other pre-built models within GA, like Last Interaction, First Interaction and Linear. Take a case where social, on Last Interaction, has 80 conversions, but on First Interaction, it's got 340, and on Linear, around 144.This suggests investing more in social, because you see it has a natural impact on the overall number of conversions. But in standard reporting, on a last click attribution model, you could easily miss this.

Stronger together

Ultimately, all those GA reports show upper funnel activity does have an impact on the final conversion. All channels work together in tandem to guide you through the funnel; without those touch points on the user's conversion journey, your revenue would be limited to what you drive through last click search, when a user is ready to convert.

The value of awareness cannot be measured on a CPA or ROI. What about engagement rates, traffic, or likes and shares? All those metrics are better suited to measure the success of an awareness campaign. Increased consumer choice, competitive marketplaces, and increased CPCs are all reasons why you should invest in branding activity. Resonate with the right audience, and when it's time to act, they'll do so with you.

Paid search alone will not grow your brand, especially in an increasingly competitive landscape. Identifying gaps in your strategy enables you to pinpoint where in the funnel you need to focus to grow. Experiment with new platforms and use the free reports GA has to offer.

Above all, remember a last click CPA is not the only measure of success.

Lotte Hill is paid media manager at RocketMill