A social media site offers advertisers two pricing options, a PPC of $0.60 and a CPA of $3.00. What CR should an ad buyer achieve on their website in order to make the two options exactly equivalent in terms of price?

Question

BlackTom AI · Accepted Answer

We need to compare two pricing options for an advertiser: pay per click (PPC) at $0.60 per click, and pay per acquisition (CPA) at $3.00 per conversion.

To find the conversion rate (CR) that makes these two options cost-equal, think in terms of cost per acquisition when using PPC. If the advertiser pays $0.60 for each click and converts with a rate CR (expressed as a fraction, i.e., 0.20 for 20%), then the expected cost per conversion under PPC is: CPC / CR.

Set this equal to the CPA price to find the break-even CR:
0.60 / CR = 3.00
CR = 0.60 / 3.00 = 0.20

Converting the decimal CR to a percentage gives 20%.

A couple of important clarifications:
- This calculation assumes CR is the probability of a conversion per click, not a conversion per impression or other metric.
- If CR were expressed in percentages, you’d still convert appropriately (0.20 as 20%).

Note on the provided data: there are no listed answer options to compare against, so we’re deriving the break-even CR from the given CPC and CPA values directly.

In summary, using the PPC price of $0.60 and the CPA price of $3.00, the break-even conversion rate is CR = 0.20, i.e., 20%.

COMM 310, Section 001: Digital Media Metrics (22581--UP---P-COMM----310-------001-) Exam 3 practice -- No points

A social media site offers advertisers two pricing options, a PPC of $0.60 and a CPA of $3.00. What CR should an ad buyer achieve on their website in order to make the two options exactly equivalent in terms of price?

View Explanation

Log in for full answers

Similar Questions

In consumer behavior, the conversion rate measures:

MC Qu. 19 Because not all purchase intentions result i... Because not all purchase intentions result in an actual purchase, retailers calculate the ________ Blank to measure how effectively a decision to purchase a specific product results in a completed purchase.

Eddiebauer.com constantly reminds customers of recently viewed items and informs them when stock is low in an effort to entice the customer to make a purchase. Eddie Bauer is trying to improve its

Why would a firm record the number of abandoned virtual carts on its website?

Retailers use Blank ______ to see how well they are doing at turning potential buyers into actual buyers.

The number of people who complete a form on a landing page divided by the number of people who visited the page is called...

_______________ refers to the percentage of people who take action on a particular asset, such as an opt-in form, out of the total number of people who actually land on the asset.

In a consumer society, many adults channel creativity into buying things

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler