Cost Per Acquisition

Written by Patricia Tunstall
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Cost per acquisition is the calculation of the advertising cost to acquire a new customer. When you receive the desired information from a potential customer in direct response advertising, this is the lead you pay for in per inquiry programs. With lead generation systems, you pay only for the number of inquiries, or leads, that result from your ad campaign, regardless of the type of media.

The advertising agency that is managing your campaign handles all the details of the operation, including reporting the results to you in real time. When potential customers phone the toll-free number given in the ad, this is registered as a lead, if it meets the standards you set in advance. This lead is tallied with other calls to give real-time totals, and you can then begin computing your cost per acquisition.

Tracking Potential Customers

The cost per acquisition, or per lead, is easily determined when you know the total expenditures for the ad campaign and know the total number of responses. In order to give you the most effective ad that leads customers to your website, for instance, the advertising agency develops keywords and phrases used in the ad. Finally, the agency hosts the landing page on which potential customers give their personal information before they enter your website.

Once this is accomplished, you have your lead, which is your basic charge in per inquiry advertising. Reporting to you can be done in real time or in daily batching. If you are in a fast-moving, competitive enterprise, you might find real time is vital to being able to keep up with events or necessary changes in your pricing.

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