Marketing Dictionary
Cost Per Acquisition (CPA)
Definition
A metric used in online advertising to measure the aggregate cost to acquire one paying customer on a campaign or channel level.
Deep Dive
Cost Per Acquisition (CPA), sometimes referred to as Cost Per Action, is a marketing metric that measures the aggregate cost to acquire one paying customer or achieve a specific conversion goal through a particular campaign or marketing channel. It is calculated by dividing the total cost of a marketing campaign by the number of conversions or new customers generated by that campaign. CPA is a crucial metric for evaluating the efficiency and profitability of advertising efforts, as it directly ties marketing spend to concrete outcomes.
Examples & Use Cases
- 1An online retailer spends $1,000 on a Google Ads campaign that results in 50 new customer purchases, yielding a CPA of $20.
- 2A subscription service allocates $5,000 to a Facebook Ads campaign, which acquires 25 new subscribers, resulting in a CPA of $200.
- 3An affiliate marketing program pays out $100 in commissions to generate a single sale, making the CPA for that channel $100.
Related Terms
Customer Lifetime Value (CLV)Return on Investment (ROI)Cost Per Click (CPC)