Setting CPAs using Elasticity and the Marginal CPA

Many people think that as long as they stay within the CPA target set by finance they must be making money. Right? Wrong. Check out this piece I wrote for MyTotalRetail.com which outlines how you need to consider the concept of elasticity when deciding what to pay for a customer. While this post focuses on paid search the concept is true for all types of customer acquisition where you can vary CPA and measure change in volume of acquired customers.

http://www.mytotalretail.com/article/why-merchants-need-to-understand-market-elasticity-to-master-paid-search