10 Proven Ways to Reduce CPA and Boost ROI

Cost per acquisition (CPA) is the cost you pay for each new customer. You can reduce CPA with detailed audience segmentation, ongoing market research, and pausing keyword bids, among more tips in this guide.

Ever spent days, if not weeks, trying to convert a customer?

Once the transaction finally goes through, the hard work feels like it was worth it.

Or was it? Cost per acquisition (CPA) helps you answer precisely that.

A high CPA could be worth it if your return on investement (ROI) is through the roof, but if the ratio falls short? It might be time to rethink your strategy and learn how to reduce CPA.

Ian Dawson, lead strategist at HawkSEM, has nearly two decades of experience lowering CPA for clients’ SEO and paid search campaigns. In this guide, he shares his battle-tested strategies and insights to slash acquisition costs for SaaS and ecommerce businesses.

If you’re tired of overpaying for customers, keep reading.

1. Improve your Quality Score

Quality Score (QS) is Google’s metric for the relevance and quality of your ad. This figure isn’t just a number on a chart; it also determines your position on the search engine results page (SERP), as well as your cost per click (CPC).

CPC refers to the dollar amount you’ll have to pay each time someone clicks on your PPC ad.

Higher CPCs are a sure way to skyrocket your CPA, since the cost of getting traffic and potential customers becomes higher. That’s why Dawson recommends mitigating both, starting with your QS:

“Improving QS can help reduce click costs, which in turn help lower CPA,” Dawson explains.

Another bonus? In addition to lowered click costs, improving QS can lead to higher clickthrough rates (CTRs). This is good news.

“With a higher chance of getting a click, you have a higher chance of the conversion at a lower CPA,” according to Dawson.

More clicks equals more opportunities to turn browsers into buyers without breaking the bank.

2. Identify ineffective geographical targets

Let’s say you started your ecommerce business in 2010 and found most of your customers resided in Midwest America. Fast forward 14 years and the digital landscape (along with your target audience) has evolved drastically.

Those once-sleepy towns you targeted might now be bustling hubs for your industry, attracting fierce competition.

If you don’t review your geographical targeting in Google Ads regularly, you could pay to show ads to irrelevant audiences, driving up your average cost per conversion and CPA.

Dawson’s solution?

“I recommend granular geographic targeting for easy review of high or low CPA regions,” he advises. “You can pause regions that have prohibitively high CPAs.”

This frees you up to direct marketing dollars to ad groups in regions where they’re most effective.

(Image: Delmaine Donson/peopleimages.com)

3. Lower or pause keyword bids

When was the last time you assessed keyword performance in your PPC campaigns?

Here’s the thing: the difference between an irrelevant and relevant keyword comes down to revenue. If your target audience doesn’t search the keywords you’re bidding on, you’ll essentially pay into a fruitless marketing strategy.

And even if your audience searched those keywords a few months ago, that doesn’t mean they’ll continue to search for them now. That’s why you need to assess keyword performance and pause (or lower) bids to reach a healthy target CPA.

Dawson elaborates:

“With some bidding strategies, you are able to see your bids versus the estimated top-of-page bid,” he says. “This makes it easy to know if you’re bidding too much or not enough to ensure impression volume.”

What if you use an automated strategy that’s supposed to optimize your bids for you? Dawson sees these models as a great source of data to help you lower your CPA:

“Automated bidding models will often forecast changes in budgets for conversions, which can help inform decisions about bidding too high or too low,” he says.

Regular keyword audits help you spot potential negative keywords to exclude from your targeting criteria.

Take the hypothetical yoga brand “Nirvana Goods.” To avoid irrelevant traffic from ‘90s grunge fans, they could eliminate broad match keywords and add “band” or “music” as negative keywords.

The good news?

If you have an award-winning PPC agency like HawkSEM running the show, you can bet on daily reviews to keep your bids optimized.

We proactively identify and address any keyword bids that don’t bring revenue, so you can rest easy knowing your ad spend is working hard for your brand.

4. Bid on specific keywords with transactional intent

Search intent explains an audience’s motivation behind queries on search engines like Google or Bing. While some search to learn, others are ready to buy — these are your most qualified customers.

This is known as transactional intent, which has different search terms from informational and commercial intent.

According to Dawson, you should shift your bidding focus to transactional intent keywords to speed up conversions.

While CPCs are higher for transactional keywords, the purchase-heavy motivation behind them make people more likely to buy than those just looking for general information.

5. Analyze audience segments

Say you’re a relatively new SaaS brand and you have a hunch about your ideal target audience. Perhaps middle-aged parents are a promising demographic. Does that mean you should jump right into hyper-targeted ads without absolute certainty?

Not so fast, urges Dawson, or you might miss out on the right audience. Goodbye, potential profits, and hello, skyrocketing CPAs. 

Instead, he suggests you go broader and use A/B testing to learn more about your audience via the Observation setting:

“I recommend having relevant audience segments in Observation so you can see if a particular audience results in a higher or lower CPA than average for the campaign,” says Dawson.

“You might find audiences to exclude or audiences for targeting expansion at a lower CPA.”

Keep in mind that the Observation setting’s broader reach could result in a higher up-front investment. However, the valuable insight you’ll garner will save you money (and reduce CPA) in the long run because you won’t target non-qualified audiences.

(Image: Adobe Stock)

6. Closely monitor video ad campaigns

According to 90% of marketers, video ads have contributed to greater ROI in their overall marketing strategy. That means more likes and impressions, customer retention, views, and overall sales.

But video marketing channels are some of the most expensive, and production can be costly. That’s why Dawson says video ads could be the reason for high CPAs if not carefully monitored:

“You’ll want to review placement reports to ensure your video ads show up on appropriate YouTube channels and videos,” he recommends.

“For example, you might want to exclude children’s channels if you are marketing industrial equipment.”

Video ad strategies also play a role in successful retargeting campaigns.

7. Run occasional remarketing campaigns

Remarketing campaigns target those who have already interacted with your website or other online assets.

Since these audiences are further down the sales funnel, a well-timed remarketing campaign can answer lingering questions or sweeten the deal with a tempting offer.

However, audience segmentation is key to optimizing remarketing.

Does remarketing always lead to quicker conversions and lower CPAs? Not necessarily, says Dawson:

“If the primary goal is CPA reduction, remarketing can sometimes increase overall spend at a higher rate than conversion increases, which can increase an overall CPA,” he explains.

This rings especially true if you don’t tailor video marketing ads to your remarketing audiences:

“What does the video accomplish when a user sees it?,” asks Dawson. “If you’re remarketing, you’ll want a video that relates to the product or service that the user has previously researched on your site.”

Once you check all those boxes, keep monitoring your remarketing campaigns for wasted ad spend and high CPAs:

“Reviewing ad placements is important to ensure your messaging is shown on appropriate sites,” emphasizes Dawson. “Excluding placements with high CPA or low CTR can help to improve remarketing campaigns.”

For example, you might notice more clicks and conversions for the Facebook Ads that appear on your audience feeds compared to your search engine ads.

That doesn’t always mean you should pause the search ads, but it could be worth testing out what happens when you allocate more of your budget to Facebook Ads instead.

8. Conduct regular market research (SaaS brands)

Businesses went from using eight SaaS products in 2015 to 130 in 2022 — that’s a 1,625% increase in seven years. This explosive growth means there are more SaaS solutions than ever, as well as fiercer competition for a spot in your client’s tech stack.

Dawson stresses the importance of knowing your rivals:

“Market research is vital when it comes to lowering CPA for SaaS advertising,” he says. “Knowing competition for your keywords and business can inform decisions for ad spend, which ultimately leads to your CPA.”

But market research is equally about your customers as it’s about competitors. One overlooked resource, according to Dawson?

“Your sales team is also very important to your CPA,” he says. “They are the people that talk to leads and [decide] whether they are good or bad quality, and can help inform advertising decisions by learning about what keywords, ad copy, or service needs make for a good lead.”

Don’t forget SaaS brands are often plagued by more spam contact form submissions compared to other industries.

This could be due to hackers trying to gain access to the abundant user info on your software, an attempt that they can’t as easily conduct on a retail business. This, in turn, can increase CPA.

Need a leg up in your competitive analysis and market research? Our digital marketing gurus will size up the competition and fortify your strategy.

9. Rectify any issues with conversion tracking

You can’t reduce your CPA without accurate baseline metrics. Unfortunately, this is all too common for marketers who are unfamiliar with Google Analytics (GA).

Our solution? 

We integrate sales data from your customer relationship management (CRM) systems directly with GA.

From there, we dive deep into the details of what defines a conversion for your business. Sometimes, that’s not limited to one type of action or event. For example, you might track a video view as one conversion.

However, to fully leverage GA4 (the latest version of Google Analytics), we suggest you create custom conversions with multiple events, like a video view and a contact form fill-out.

Another common tracking error? Multiple tags for the same conversion. This can easily skew conversion data and result in inaccurate calculations of CPA.

Finally, remember to track relevant key performance indicators (KPIs) based on your industry.

For ecommerce businesses, cart abandonment rate is a vital one because it helps you identify snags in the shopping experience and eliminate them for quicker sales and lower CPAs.

SaaS brands, on the other hand, might keep tabs on churn rate (how often customers stop their subscriptions) and customer lifetime value (total monetary value of a customer throughout their relationship with the brand).

HawkSEM clients gain access to next-level tracking with our proprietary tech, ConversionIQ. We aggregate thousands of data points across your marketing strategy to attribute revenue to each ad type, keyword, asset, and more.

The result is a clean, digestible dashboard that gives you a bird’s eye view of what’s working and what isn’t across your marketing efforts for better optimization and ROI.

(Image: Adobe Stock)

10. Improve the user experience (UX)

Nobody likes a slow web page — least of all your audience, who will bounce if you keep them waiting longer than five seconds.

The same goes for clunky layouts on mobile devices, disorganized headings, and a non-intuitive website design. And don’t get us started on 404 errors (a common symptom of improper web migrations from mergers or rebrands).

Every click your ad brings to your website comes at a premium. If the user experience isn’t up to par, those clicks could translate to marketing efforts that don’t reap conversions. Yikes.

HawkSEM typically conducts a full website audit that includes UX elements like page speed, site structure, landing page visuals, copy layouts, and more.

To keep your UX in tip-top shape, regularly review this handy checklist:

• Page load time and overall site speed
• Site architecture
• Mobile-friendliness
• URLs for broken pages or 404 errors
• Copy layout
• Visual elements

The takeaway

CPA is the ultimate test of your marketing effectiveness. The higher your CPA, the harder your marketing budget has to work to attract each sale (unless you have an exceptional ROI to balance things out).

With these insights, you can master how to reduce CPA and finally start to see results.

And if you don’t have the time it takes to monitor conversion rate, optimize keyword bids, and conduct market research? We’re happy to do the heavy lifting.

HawkSEM clients see an average of 4.5X ROI after partnering with our PPC experts. We have niche knowledge of how CPA looks and evolves by industry, including SaaS, ecommerce, finance, retail, and more.

Don’t let high CPAs hold you back from your ROI goals. Hit us up and we’ll show you how to get more for less.