What is CPA?
CPA is an e-commerce advertising term that stands for Cost per Acquisition. It has different significance depending on the actions that are meant to be tracked.
One common application of CPA is measuring the aggregate cost to acquire one paying customer. This is calculated on a campaign or channel level. Unlike metrics such as conversion rate, CPA is a financial metric. It measures how much revenue has been earned through a marketing effort, effectively measuring its success. If the CPA is low, the campaign has been effective.
CPA can be tracked through the use of UTM and custom links, CRM software, surveying customers to find which channel they used, or exporting and analyzing raw campaign data.
CPA can also signify Cost per Action. In this case, it’s a payment model in which the advertiser only pays a fee when the user performs an action (e.g. signs up for the email list, buys a product, etc.).
An important factor with CPA is search engine optimization. If a website receives organic traffic through SEO, the CPA will be much lower.
The financial CPA is calculated by dividing the acquisition cost by conversions (CPA = cost/conversions) to show the final cost per acquisition.