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Understanding Blended CPA
Want better insight into which marketing channel is most effective at driving conversions for your ecommerce business? Blended cost per acquisition (CPA) is a metric you’ll want to pay close attention to for all orders, not just new ones.
At Tydo, we define blended CPA as the marketing cost needed to transact a single order. Blended refers to all channels. By tracking your blended cost per acquisition, you can measure the effectiveness of all your marketing campaigns and strategies (both paid and organic) rather than at the channel-specific level.
Overall, Blended CPA helps you make smarter decisions about where to allocate your marketing budget and how to optimize for growth.
How we calculate Blended CPA
Cost per acquisition (blended) = total ad spend across all connected ad channels/ sum of orders placed
Data source: Shopify, connected ad channels (Google Ads, Meta, etc.)
Important note: At Tydo, we exclude test orders from this metric.
Example
Let’s say you run an online snack store. Last month, you spent $30,000 on paid ad channels across different platforms (TikTok, Instagram, Snapchat, and Pinterest). After looking at your Shopify data, you see that there are 75,000 total orders from these channels combined.
Using the formula, your blended CPA is $30,000/75,000 = $0.4.
Takeaway
Blended CPA is like a symphony, where each instrument represents a different channel. Just as a symphony is composed of various instruments playing together in harmony to create a beautiful sound, a business combines different channels, such as paid advertising, organic search, social media, and email marketing, to acquire new customers and users.
As with most ecommerce metrics, tracking blended CPA offers insight into how to optimize your marketing budget and strategy. When you want to increase your return on investment (ROI), you first want to take a look at how much you spend per acquisition.
Tracking costs across all channels helps you decide where to allocate more spending or where to pull back. Another advantage of tracking blended CPA is it gives you more leverage for planning and forecasting.
You can start to notice which channels perform better during the holiday shopping season (or other seasons) and dedicate more time and resources to the best-performing ones.
While applying a chunk of your marketing budget to one channel (Facebook ads, for example) throughout the year might not make sense, looking at historical data can help you see patterns, gaps, and opportunities.
Following Blended CPA metrics helps you:
- Optimize your marketing strategy and budget
- Improve return on investment (ROI)
- Better forecast and plan throughout the year
Ready to level up your learning?
Read more about Blended CPA
What is CPA by Channel?
CPA by channel is the cost to acquire a customer on a channel level. Like Blended CPA, it helps you see the revenue impact of your paid marketing efforts; however, this is on a per-channel basis, not as a whole.
How to decrease your Blended CPA
Getting started with organic SEO
Search engine optimization (SEO) is a long game, but with patience, it has the potential to pay off.
If you’re looking to acquire new customers without breaking the bank, invest in organic search. Search engine optimization helps ecommerce businesses drive traffic and stand out in a crowded online environment.
Jason Wong, the founder of Doe Beauty, explains, “With costs rising across paid channels from time to time, the balancing factor for us has been influencers and SEO, which allows us to drive our blended CPA down.”
Wong and his team have implemented various SEO strategies, including
- Adding guests posts to high authority sites (building trust within Google’s algorithm)
- Keyword-optimizing blog posts on the Doe Beauty website
- Building optimized pages using Google’s accelerated mobile pages (AMP) format
Try OOH advertising
Out-of-home (OOH) advertising has been an exciting alternative for brands wanting to stand out in a saturated digital ad space while improving return on ad spend (ROAS).
OOH advertising is especially advantageous because it helps build brand recognition and engage larger audiences. Adgile Media Group works with brands by placing billboards on the sides of trucks.
Nik Sharma, the founder of Sharma Brands, says that in partnering with Adgile, he’s been able to capture mobile device IDs of consumers who see the branded truck, allowing for ad targeting across various platforms such as Meta and TikTok.
Explore partnership opportunities
Thoughtful partnerships greatly expand brand awareness. They help brands reach different audiences. This is one way to lower CPAs. Experiment with different ways to get more attention for your brand with the following partnership ideas:
- Giveaways on social media such as this one from Canopy
- Brand collaborations and interactive experiences
- Target high-intent shoppers through platforms like Disco
Here’s an example: Hydrant partnered with SoulCycle to hand out electrolyte packets to SoulCycle riders.
Although Hydrant passed out the packets for free, there was a clear return on investment because the partnership made sense. SoulCycle riders are the ideal consumer for an electrolyte replenishment beverage.
Plus, partnerships are a great way to encourage brand discovery. Canal is one platform that enables discovery for ecommerce brands.
Depending on your product, partnering with adjacent ecommerce brands helps expand awareness and reach first-time customers. For example, Deux X Bloom and Fly By Jing x Fishwife are two examples of successful partnerships.
Why does Blended CPA matter?
Monitoring blended CPA matters because it gives you a detailed picture of how well your marketing campaigns are performing (or where improvements can be made).
Attribution is complicated. Looking at it on a per-channel basis isn’t 100% accurate, so Blended CPA is useful in getting the full picture of your marketing efforts across the entire funnel.
What are the advantages of Blended CPA vs. Paid CPA?
Paid CPA gives you a singular view of your paid channels. Knowing how this channel performs and the impact it has on your business is helpful; however, it only includes your paid channels, not organic. It’s only one part of your marketing story.
Blended CPA is more helpful in understanding the true cost of acquiring a customer since it includes both paid and organic. Again, it’s a fuller picture.
Both metrics help you make data-driven decisions, especially around your marketing strategy and budget.
