When your CPA (cost-per-acquisition) is running too high, it’s easy to panic at the wrong number.
The CPA is just the output. Something upstream broke, and the CPA is a symptom. Everybody sees this issue eventually. It’s part of the lifecycle of an ad account.
It’s important to know how to diagnose and fix this as quickly as possible.
In this issue:
🔍 How to backtrack a broken ad account
📉 What CPA is actually telling you
⚡ The audit framework, step by step
Let’s dive in!
It’s not the CPA
If your CPA spiked or your ROAS dropped, that's not the cause. CPA is the scoreboard.
You need to backtrack from that point and find out what actually broke.
Start at the top of the funnel with a comparison:
Look at a period that did really well. Now, look at a period that is no longer doing well.
Did CPMs rise? If yes, how do we control CPMs? Some of it is seasonality, so we might want to see if things rose year over year.
Other ways to control you CPMs are:
Test landing pages and see if that's going to change things.
Try paid partnership to drop CPMs
Try a bid cap model to directly control the CPMs
The next step is click-through rate.
Did the click-through rate improve or did it go lower? If it went lower, then you want to break out audience segments and look at audience segments.
Is it falling on your new audience?
Is it falling on your engaged audience?
Is it falling on your existing customers?
Is it improving in certain areas?
If it's improving on the new audience but falling on the engaged audience, cool. These are the creatives we need to go fix, because we're not trying to engage customers back at the rate we were previously, based on the click-through rate.
Cost-per-link click is a direct correlation of CPM and CTR. You can start here and work backward if you want, but it points you to the same place. It’s just another way to quickly get a sense of things.
Then check add-to-cart percentage.
Are people still adding at the same rate as they were in good window? If not, look at the traffic you're sending and where you're sending it.
Did the landing page change? Did the offer change? The break is somewhere between the click and the cart.
Cost per add-to-cart and initiate checkout follow the same logic. Each metric inherits the break from the one above it. If something is up, it's downstream of CPM, CTR, or ATC%. Fix one of those, it fixes itself.
Then you get to your CPA.
If it spiked, the cause is somewhere above it. Find the metric that changed, and that change is your cause.
You need to break it down further and find out what ended up breaking, so you can fix it.
I've written up an action checklist below you can use to dissect your ad account.
From the feed
Another one of our customers at DREAMLABS absolutely knocking it out of the park with sales. This is what you get when your ad account is optimized and on-point.
Checklist: dissect a broken ad account
When the account goes sideways, most people stare at CPA and start making changes there. That's backwards.
Dig deeper and break it down until you find something that doesn't match. Focus your effort on that first.
AD ACCOUNT BREAKDOWN CHECKLIST
Pull a good window and a broken window side by side
Check CPMs: did they rise? Compare year over year to check for seasonality
Check CTR: if it dropped, break it out by new, engaged, and existing customers
Look at cost per link click
Check add-to-cart percentage: if it fell, look at traffic source and landing page changes
Look at cost per add-to-cart
Check initiate checkout rate
Identify the first metric that doesn't match the good window — that's your cause
Use this next time you’re seeing a spike in CPA.
— Torii, founder @ DREAMLABS
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