Synonyms: Cost per action Acquisition cost
CPA stands for Cost Per Acquisition, a digital marketing metric that measures the cost of acquiring a new customer or conversion. It indicates how much money you spend on advertising to generate a specific action, such as a sale, sign-up, or download. Essentially, CPA helps you understand the return on investment (ROI) for your ad campaigns by showing how much each conversion is costing.
In a CPA advertising model, advertisers only pay when a user completes a desired action, making it a performance-based pricing model. For example, in Google Ads, you can set a target CPA, and the platform will optimize your bids to try to achieve conversions at or below that cost.
Here’s why CPA is important:
- Budget efficiency: It allows businesses to optimize spending by focusing on actions that directly contribute to their goals, like generating leads or sales.
- Performance tracking: CPA helps assess how effective your marketing efforts are at driving conversions.
- Scalability: By understanding your CPA, you can scale campaigns that perform well and discontinue those that don’t.
A low CPA means you’re getting conversions efficiently, while a high CPA might suggest your marketing strategy needs adjustment.