Cost per Acquisition (CPA)

What is cost per acquisition? Cost per acquisition (CPA) is the cost incurred to acquire a single conversion. It’s calculated by dividing the total cost of a campaign by the number of conversions it generated. Lower CPA indicates more efficient campaign management.

Types of cost per acquisition:

• Target CPA: This is the maximum amount an advertiser is willing to pay for a conversion.
• Actual CPA: This is the average amount an advertiser pays for a conversion.

How to measure cost per acquisition:

To calculate CPA, you divide the total cost of a campaign by the number of conversions it generated. For example, if a campaign costs $10,000 and generates 100 conversions, the CPA would be $100.

Why is cost per acquisition important to marketers? CPAs help marketers to:

• Measure the efficiency and profitability of their marketing campaigns.
• Identify which marketing channels and campaigns are most effective at driving conversions at a lower cost.
• Optimize their marketing campaigns to improve ROI.

Who needs to know what cost per acquisition is:

• Digital marketing manager
• Paid search specialist
• Social media manager
• Content marketing manager
• Affiliate manager
• E-commerce manager
• Product manager
• Marketing analyst
• Brand manager

Use cost per acquisition in a sentence: “There are important distinctions between Cost Per Acquisition and Customer Acquisition Cost. The former entails accounting for a certain result, like a sale or sign up, while the latter accounts for how much spending was needed to get that new customer. To add to the confusion, Cost Per Action just measures the average dollars necessary to get a click or a view.”