To understand how much you can afford to spend to acquire each basic member, you need to understand what your maximum cost per lead (CPL) is. This will allow you to set your bids at an affordable rate and prevent you from overbidding, helping you achieve your target profit margin. If you spend over your maximum CPL, you’ll lose money on every lead that you buy.
By knowing what your maximum CPL is, you can work out how much you need to optimise and where. There may be some keywords that are converting well that you can afford to increase your bids on, there may be others that need reducing or pausing completely.
Premium Account Manager at White Label Dating, Chris, has been working on a report that shows the maximum CPL by site, device, source and ad group. The report shows the Lifetime Value (LTV) of every paying member multiplied by your conversion rate. This will tell you how much you can spend per basic member to break even, while maintaining an affordable cost per acquisition (CPA).
You can calculate your conversion rates by source and ad group using the Campaign Tracking report in the Partner Portal. You can use this simple but important calculation to understand how much you should be paying for basic members from each traffic source – not just PPC.
When you have calculated your maximum CPL, you can work out a maximum bid strategy by multiplying your maximum CPL by your basic conversion rate. You can use your maximum CPL as a guide for all of your optimisation as you can quickly and effectively judge what works well for you and what doesn’t. These calculations will help you analyse where you can afford to bid more and by how much, helping you to run profitable campaigns.