SEO glossary: Cost per order (CPO)

What is the cost per order?

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

 

Total costs include, among other things, advertising costs incurred 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?

To determine Cost per Order, a quick and simple calculation is required. It involves dividing the total cost of a given action by the number of responses.

 

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 can or should the costs for a particular advertising campaign be at most? Accordingly, marketers can then determine roughly how high the profit calculation will be in the course of an advertising campaign. This determines how effective a particular marketing campaign will be.

 

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 cost and thus find out the actual success of an ad.

 

What is the significance of cost per order (CPO) 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 real sales in the course of online marketing to scale the costs for advertising measures much better. Accordingly, costs are only incurred when a sale is actually made.

 

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