Campaign optimization is a major task and responsibility of a campaign team because optimization logic decides the return on ad spend at the end of the month. Optimization logic should contain a lever to manage CPA/ROAS whenever necessary. It is difficult for the optimization team alone to create an optimization logic with a flexible lever to maintain CPA/ROAS. It should be a combination of ad platform features/data and analytics insights. (Read guide to get insights understanding commonalities)
Ad platform should be able to provide CPAs/ROAs for narrow segments and able to stop or enable a particular segment. Facebook provides numerous segmentation facilities to dissect your report to understand CPA/ROAS at a very granular level. It contains age/gender segmentation, other demographic and interest segments. Adwords provides keywords, placement, topic, in-market, affinity and other segmentation capabilities. Look at each segment to understand opportunities and leakages, so opportunities can be expanded while stopping the leakages.
Let’s assume the product revenue is $1000 and your marketing budget for a product sale is $100. Then, ideally, your CPA should be $100, but the problem is how many days you are going to wait before you stop your campaign/segment? You can stop it within one day, 3 days or within one week. Let’s say you stopped a campaign within one week, what if few users convert after 30 days, which means you stopped the campaign blindly?
To avoid such blind optimization, you can use time to conversion report from Google Analytics. It is a great resource to understand time to conversion from each of your paid channels. The below graph shows the “Time to Conversion” Report:
The above graph indicates that 40% converts at the same day while 60% of the users require more than one day to convert and a similar pattern applies to 3 days, 7 days and 30 days. If you stop the campaign within 1 day, you should factor 60% of the conversions will come in the future. Based on this logic, the following lever can be created to optimize the campaign. If you stop the campaign after three days, your cut-off CPA should be $100 (100/60) = $167, and it will factor the 40% of the future conversions. This is the perfect lever for you to optimize campaigns; also, you can do optimization after 3, 7 and 30 days.
Based on your overall CPA/ROAS, you can push the lever (Cut-off CPA) up or down. This gives you greater flexibility to manage your campaign in a more effective manner. This is just the start; you can factor the attribution model rather depending on the last click CPAs.