One of the worst things you can do for your business is to limit your marketing when you know the results that you are getting are profitable. It is important to remember that it is the cost relative to the conversion that is important – not how much you are spending overall. If one conversion is profitable at a certain CPA (cost per action) or CPV (cost per value), then 100 conversions will be as well! Sure, you will spend 100 times more to acquire the 100 conversions, but that’s not the point. The point is you now have profitably grown your business by a factor of 100.
Finch recently saw this with a Brazilian client who is running on a CPA (cost per action) model with Finch. Their goal CPA is BRL8.74 per conversion. This is the amount they can spend on each conversion and be profitable. After they launched with Finch, their optimized campaigns were driving conversions that cost less than BRL8.74. However, the client had their daily budget to BRL150.00, which was a level that was below marketplace demand. In other words, their ads were only showing enough each day to spend the BRL150.00, but they had the potential to spend much more as there was an abundance of users on Google searching on the keywords in their campaigns.
After explaining this to the client, they raised their budget from BRL150.00 to BRL565.00, which was the amount AdWords was recommending.
The result: The CPA remained relatively constant and below their goal CPA of BRL8.74. The volume of conversions, however, lifted from under 23 per day to over 50 per day – a 120% increase!
You can see a visual representation of this change in the chart below. The cost line (red) jumped up on July 2nd, when the client raised their budget. The conversion line (green) also jumped immediately. The CPA line (black) remained under the goal CPA line (yellow) on average.
So there you have it – the only thing keeping the client from profitably doubling their business was having their budget get in the way. Don’t let this happen to your company as well!