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Blog
June
13
2019
COST PER ACTION: LEARN YOUR INDUSTRY'S FACEBOOK ADS BENCHMARKS

Cost Per Action: Learn Your Industry’s Facebook Ads Benchmarks

By LJ Diaz 0

One of the essential things for all kinds of businesses is the marketing strategy, particularly advertising campaign — and you can do it either online or the traditional way.

Technically, an ad campaign is just creating and disseminating information about your goods and services.

You have to get more eyeballs on you and eventually get them to buy from you.

But, an ad campaign is more than that. It is about connecting to the people to get their trust, become your customers, and gradually make them your fans.

Ad campaigns can help you achieve the following:

  1. Creating brand awareness for your product
  2. Driving sales of your product or service
  3. Generating leads

And while there is no problem if you are sticking with the traditional marketing tactics such as print ads, flyers, pamphlets, billboards, newspapers, TV and radio ads, etc., these methods may not be that wise in terms of budget and effectivity.

The digital age is already here, and if you are not yet adapting the benefits of online marketing, your competitors will be leaving you behind the competition or worse, your business is going extinct sooner or later.

Disadvantages of Traditional Marketing

In case you didn’t know, here are some of the downsides to traditional marketing that you should realize if you don’t consider yet to use digital marketing:

  • There’s only a little interaction between the medium being used and the suspects and prospects.
  • You can’t give detailed information about your products and services.
  • It can be very costly. For instance, radio and TV ads can reach a broad audience, but the downside is that you will spend thousands of dollars to disseminate very little information.
  • Results are not easily measured. You wouldn’t easily know if your campaign was successful.

All the mentioned disadvantages of traditional marketing above are the opposite for digital marketing except, somehow, for being costly.

Digital marketing can be very costly, depending on the medium you’re going to use.

But if you have a digital marketing nerd that you can rely on, he may save you from wasting effort, time, and money from out-of-date, ineffective strategies that won’t work.

You should be aware that all of the online strategies today may no longer work for tomorrow.  

 

Related Article: 8 GOOD REASONS WHY YOU SHOULD LEAVE DIGITAL MARKETING TO THE EXPERTS  

 

The Cost Per Action Advertising: What is it?

There are many ways to conduct an online ad campaign.

  1. Paying search engines every time one of your ads is clicked.
  2. Paying every 1,000 impressions (when visitors have seen your ads).
  3. Paying each time someone clicks on your ad and results in sales-related action.

But in this article, we’ll be focusing on the third option of conducting an online ad campaign.

It is more like the combination of the first and second options above. It requires a user to click the ad to register or sign up for a free trial, free download, or to purchase a product or a service.

As mentioned, an ad can generate leads and sign ups and registrations serve as a lead generation tool while purchasing or getting a service means immediate profit.

The third method is commonly called Cost-Per-Action advertising (cost per acquisition, pay per action, performance-based ads in some other terms) and you only pay the internet publishers or search engines hosting your online ads for a specified type of action.

For instance, if the ad serves to generate leads, you and the host may agree for a certain amount depending on the number of target leads. And if the ad is made to drive sales, the payment is usually commission-based.

Benefits of using Cost Per Action ads for Advertisers

  • Less risk. You will only pay when you successfully get leads or when there are sales happen. It protects you from impressions and fraud clicks that don’t convert.
  • When you got leads, it means potential profit. When you made a sale, then it is instant cash in your pocket. And it means you pay when potential money is coming in. It will save you from bankruptcy.

How can Cost Per Action possibly hurt advertisers?

CPA indeed involves less risk, but you can still lose money from this method when you use this a lead generation tool.

If you are getting low conversions from the leads you got from the campaign, it’s not smart marketing anymore.

Just like in any other marketing budget, the expenses should not be greater than your company’s income.

If you are paying the publishers more for leads who are not being converted into clients, it would be hard for you to get a return on investment (ROI).

While you can negotiate with the publishers to have low fees for this method, the publisher’s approval to run your online ads will depend on its ability to get conversions.

Is it possible for publishers not to run my ads on a CPA basis?

Publishers are also after a good income, and running your ads is their business too.

They want to partner with a business that has the potential to bring them a good profit.

For example, if you want Google to run your cost per action ads, you as an advertiser must prove first that you are managing a site that engages a desirable audience with excellent conversions and makes enough profit.

The qualifications may vary per advertiser to advertiser.

Where can I try conducting Cost Per Action advertising?

We at MiamiMarketer would recommend you to try advertising on Facebook.

The reason is simple — Facebook has become one of the largest advertising platforms today.

With nearly 2 billion active daily users and 2.32 billion active users monthly, Facebook is a vast network you should utilize.

Also, a report reveals that 93% of marketers use Facebook Ads to promote their business and products regularly.

Each Facebook user is said to click at least 8 Facebook ads per month — where 26% of people who were able to see the ads have ended up buying a product or a service. Facebook is now giving more ad targeting options to ensure that your ads will appear in front of your target audience.

So what’s the cost per action in your industry if you’ll run Facebook Ads on a CPA basis?

Average Cost Per Action in Facebook Ads in Various Industries

Cost Per Action Facebook Ads Benchmarks The above photo shows the report gathered and analyzed by an online marketing agency based on the Facebook ads data of their 256 clients in the US from November 2016 through January 2017.

The data shows that education industry has the lowest CPA fees with $7.85 per successful user action while the expensive ones are from auto industry ($43.84), home improvement ($44.66), and technology services ($55.21).

The average cost per action for Facebook ads in all mentioned industries is $18.68

INDUSTRY AVERAGE CPA
Apparel $10.98
Auto $43.84
B2B $23.77
Beauty $25.49
Consumer Services $31.11
Education $7.85
Employment & Job Training $23.24
Finance & Insurance $41.43
Fitness $13.29
Home Improvement $44.66
Healthcare $12.31
Industrial Services $38.21
Legal $28.70
Real Estate $16.92
Retail $21.47
Technology $55.21
Travel & Hospitality $22.50

Again, you should learn how to negotiate with the publishers.

But before that, you should determine how much you are willing to spend on this kind of advertising whether to generate leads or drive sales.

You can try this Cost Per Action calculator offered by ClickZ so you can have an idea on how you can spend and grow when you decide to run CPA-based ads.


If you want information on how to develop a rapid action plan for growing your business


 

author: LJ Diaz