Executives at a small e-commerce company are debating AdWords performance metrics. If the budget is unlimited as long as return on investment (ROI) is positive, which recommendation best positions the company for maximum profit?
Answer
- Determine whether the campaigns are profitable, then test different target cost-per-acquisition (CPA) bid increases to see which maximizes total profit
- Ad spend should always be 7% of revenue, which should be used as the target ROI
- The company’s email campaigns are the most profitable, with a cost-per-acquisition of US$15, so it should use that as a benchmark when setting target cost-per-acquisition (CPA) bids
- Decrease the target cost-per-acquisition (CPA) for the campaigns from US$15 to US$10 to drive an increase in profit per customer
