It’s no secret that digital advertising is one of the most powerful tactics for promoting events. But after launching your campaign, are you asking yourself, “Is my event’s ad campaign profitable?”
Breaking down the data can be confusing, but never fear. Bauer Entertainment Marketing is here! 💪 We’ve spent countless hours researching, analyzing, and testing event ads so you don’t have to. And we’ve found that the answer is as simple as C-P-A or “Cost Per Acquisition.”
What is an event’s CPA? How do I calculate CPA?
So now that you know what CPA stands for, what does it actually mean? In short, an event’s CPA consists of the investment (cost) needed to acquire one sales order or new customer. An easy way to calculate the CPA is by dividing the total ad spend by the number of orders received.
Example? Say less. 😉 Let’s assume you spend $1,000 on digital advertising and track 100 orders. Your CPA is $10 (i.e., $1000/100).
How should I measure my event’s digital ad campaign performance?
Tricky question, we know, but let’s break it down together! BEM recommends measuring your event’s digital advertising campaign performance by calculating the ratio between the CPA and the average order value. To clarify, the average order value is how much revenue each sale typically produces.
By dividing the CPA by the average order value, you can paint a picture of the overall spend-to-profit ratio… And it’s a pretty badass painting if we do say so ourselves! Using the example above, if each order is $50 on average and the CPA is $10, that means advertising costs 20% of the average order value, yielding an 80% profit margin..
Upon analyzing the data across several event advertising campaigns, we compared our clients’ average spend-to-profit ratio to the industry standard. Let’s use festivals as an example. While most festivals will see around a 25% ratio, BEM has generated an incredible average of 16% for our festival clients. This means we’re keeping costs down and profits high! We often see even lower ratios for many of our clients due to focused targeting and campaign optimization—shoutout to our killer ad specialists. BEM is proud to help our partners obtain an average of 84% profit from our digital advertising campaigns!
Can I sell more tickets by increasing ad spend?
Glad you asked! By knowing what your CPA is, you now have the power to make strategic decisions about adjusting the campaign's ad spend. If your goal is to sell another 100 orders, the CPA is $10, and your campaign is profitable with a cost of just 20% of the average order value, then you can add an additional $1,000 to the ad budget to achieve your goal.
To learn more about how we determine ad spend or to evaluate the effectiveness of your digital ad campaigns, just contact BEM! We’re here to help you plan, implement, and optimize your next event’s digital advertising for maximum ROI. 🙌