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  4. CPA vs ROAS Trade-offs

CPA vs ROAS Trade-offs

Objective

To provide a clear decision-making framework for balancing Cost Per Acquisition (CPA) and Return on Ad Spend (ROAS) in Cashkr’s performance marketing campaigns, ensuring order volume targets are met without compromising profitability.

Scope

Applies to Google Ads, Meta Ads, LinkedIn Ads, and other paid channels where the goal is to drive orders, but both CPA and ROAS are tracked for efficiency.

Key Definitions

  • CPA (Cost Per Acquisition):
    Total Ad Spend ÷ Total Orders.
    Measures how much it costs to acquire a single order.

  • ROAS (Return on Ad Spend):
    Total Revenue from Ads ÷ Total Ad Spend.
    Measures revenue efficiency of each rupee spent.

Core Trade-off Logic

Scenario CPA ROAS Action
1. Low CPA + High ROAS ✅ ✅ Scale Up: Increase budget by 20–30%, prioritize this campaign
2. Low CPA + Low ROAS ✅ ❌ Investigate ACV: Check if low-value orders are pulling ROAS down; consider device pricing optimization
3. High CPA + High ROAS ❌ ✅ Evaluate Margin: Keep running if profitability per order is acceptable; may limit scale
4. High CPA + Low ROAS ❌ ❌ Pause/Revamp: Poor performance; rework targeting/creatives before resuming
 

Decision-Making Rules

  1. Primary Goal:

    • For order growth targets → CPA is the main control metric.

    • For profitability targets → ROAS is the main control metric.

  2. City/Device Split Decisions:

    • In high-AOV cities/devices, allow slightly higher CPA if ROAS is still strong.

    • In low-AOV cities/devices, keep CPA stricter to avoid losses.

  3. Budget Shift Trigger:

    • If CPA is 20% above target for 5 consecutive days, shift budget to better-performing campaigns even if ROAS is healthy.

    • If ROAS is 20% below target for 5 days, check AOV & order value mix; if still unprofitable, cut spend.

  4. Campaign Testing Rule:

    • Test new audiences/creatives with a 10–15% test budget, and use CPA & ROAS together to judge viability after 7–10 days.

  5. Seasonal Adjustment:

    • During high-demand periods (festivals, launches), allow slightly higher CPA if expected order surge maintains total ROAS.

Reporting

  • Daily: Track CPA & ROAS in Ads Tracker by campaign, city, and device type.

  • Weekly: Identify campaigns in Scenario 1 (scale) and Scenario 4 (pause).

  • Monthly: Review trade-off patterns and adjust CPA targets if AOV/ROAS trends shift.

References

  • Internal Ads Tracking Sheet

  • Cashkr Budget Allocation SOP

  • Paid Marketing Campaign Types SOP

Last updated August 13, 2025
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