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%.

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? 单项选择题

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