SEO glossary: Cost per order

 

What is the cost per order?

Especially in online marketing, cost per order has become indispensable. If the customer places an order or generates a lead, CPO summarizes all the total costs incurred.

 

The total costs include, among other things, advertising costs or costs incurred for shipping a physical product from an online store.

 

The aim of cost per order is to determine the effectiveness of certain marketing steps. CPO is primarily used in internet advertising and affiliate marketing.

 

 

How is the cost per order calculated?

A quick and simple calculation is required to determine the cost per order. The total costs for a specific action are divided by the number of reactions.

 

Example:

 

(total cost of the action) / (number of reactions)

 

Once the CPO has been determined, it is now possible to define a specific budget. How high may or should the costs for a specific advertising campaign be at most? Accordingly, marketers can then determine approximately how much profit will be generated by an advertising campaign. This determines how effective a particular marketing campaign is.

 

Where and how is cost per order used?

Cost per order is mainly used in the area of Internet advertising. It starts with the placement of an advertisement. This can be a text ad or an advertising banner, for example. Since not every click and not every impression results in a purchase, the total costs incurred are therefore not transparent.

 

For this reason, CPO is used to determine the total costs and thus the actual success of an advertisement.

 

What significance does cost per order (CPO) have for online marketing?

Cost per order is based purely on real sales. This gives sellers a clear advantage. They are in a position to make a profit in the course of online marketing to scale the costs of advertising measures much better. This means that costs are only incurred if a sale is actually made.

 

At the same time, the margin can be calculated precisely in this way. Depending on how high the price for a particular product is, sellers can set themselves a certain CPO in order to remain in the profit zone. The aim here is of course to keep the CPO as low as possible.