CPA (Cost Per Acquisition) – What is CPA?
The cost per acquisition is the amount invested to convert a person into a customer, either by purchasing or subscribing to a product. When used as a payment method, instead of CPC (Cost Per Click) or CPM (Cost per Thousand Impressions), it is usually the most advantageous for the advertiser, since they only pay when a sale occurs. It is usually used as a form of payment in affiliate programs. A different CPA can (and should) be calculated for each marketing strategy we use: SEM, display, Social Ads, etc. The Cost per acquisition must be calculated carefully, as it will be subtracted from the total purchase.
How to calculate CPA
To calculate the CPA of a marketing campaign, you must apply the following formula:
Total Cost / Number of Acquisitions = CPA
For example: €100 / 4 Acquisitions = €25 CPA
The target CPA
The Target Cost per Acquisition is the average cost that an advertiser is willing to pay for each conversion made as a result of a specific campaign. Since CPA reduces the profit margin, it must be calculated for said campaign to be profitable.
Difference between Cost per acquisition and Cost per action
The acronym CPA can also be used to refer to Cost per action. This means the cost for a user to perform an action other than a purchase, such as filling out a form or signing up for an email marketing list.