What is Cost Per Acquisition (CPA)?
How much do you spend to win a single-paying customer? Cost per acquisition (CPA) is a marketing success metric that can be calculated for a campaign, an online marketing channel (such as email), or across all channels and tactics. At a campaign level, the formula is total campaign cost/conversions (paying customers) = CPA. This metric is commonly used to find out the results of display ads and affiliate marketing campaigns.
Example
For example, let’s say a company runs an online advertising campaign on social media, spending $500 in total. During the campaign, they acquire 50 new customers. The CPA would be calculated as follows:
CPA = Total Advertising Spend / Number of Acquisitions
CPA = $500 / 50
CPA = $10 per acquisition
So, the Cost Per Acquisition for this campaign is $10. This means that it cost the company an average of $10 to acquire each new customer through their advertising efforts. Marketers use CPA to evaluate the efficiency and effectiveness of their advertising campaigns and allocate their budgets accordingly to maximize their return on investment.