Note: Adtriba Sphere is a legacy feature that we continue to support but no longer sell. The latest version of this feature is available as Funnel Measurement.
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This article explains CPA, incremental CPA, and marginal CPA in Adtriba Sphere.
The incremental CPA is an average. It includes conversions you acquired at low cost (at the bottom of the curve) and conversions that cost more (at the upper part of the curve). Depending on the question you need to answer, this CPA might not be the right metric.
Calculate this metric on both levels: on an overall level (all sources, channels, and campaigns) and on an individual media channel level (source or campaign). Note: On an individual channel level, the terms CPA and Incremental CPA are often interchangeable. If the conversions attributed to a channel are incremental, you can use CPA.
Marginal CPA (MCPA)
Marginal CPA answers this question: "At the current spend level, how expensive is the next incremental conversion?"
Calculate marginal CPA mostly for incremental channels on a per source or channel level. It uses the saturation curve. It shows how much you must spend from your current position on the curve to get one more conversion. Use this metric to see which channels or sources are maxed out and where to spend your next dollar.
The calculation is
Where "delta spend" is the extra amount you spend on top of current spend and "delta conversions" is the extra conversions you get in return. To calculate it:
− Set delta spend at 1, 5, or 10% of current spend. This gives spend_new.
− Get predicted conversions (conversions_new) at spend_new by using the saturation curve.
− Calculate delta_spend as (spend_new-spend) and delta_conversions as (conversions_new-conversions).
− Calculate mCPA with delta_spend and delta_conversions in the formula above.
Summary:
− CPA: All cost divided by all conversions. Shows the overall effectiveness of all marketing and branding activities.
− ICPA: All cost divided by incremental conversions. Shows how much a customer was acquired through (paid) marketing activities.
− MCPA: Marginal cost divided by marginal conversions. Shows how much you must spend to acquire the next customer through a certain source.
In almost all cases: CPA≤ICPA≤MCPA.
Why is marginal CPA higher than CPA of a source?
This occurs because of the concave shape of the saturation function (diminishing returns to scale).
The model considers saturation behavior. You get less return when you spend more as saturation rises.