In digital marketing, CPA stands for Cost Per Acquisition or Cost Per Action. It’s a metric used to assess the effectiveness of an advertising campaign.
More precisely, it’s the ratio between the campaign’s total cost and the number of conversions generated, that is, what an advertiser spends to get a user to complete a predefined action (signing up for a mailing list, submitting a form, making a purchase, etc.).
How to calculate it
Measuring CPA is essential for anyone running any kind of online business, such as a blog or an online store.
It helps you fully understand how online advertising works and, above all, optimize the strategies you’ve chosen.
In other words, it lets you monitor your data and quantify your returns in practical terms, and adjust your approach if needed to achieve better performance.
Cost Per Acquisition is calculated from just a few pieces of information. To work it out, simply apply the following formula:
CPA = Cost of online campaigns / Number of conversions
What is target CPA?
The well-known advertising platform Google Ads (formerly AdWords) lets you fine-tune your approach with an additional tool called target CPA.
This tool sets bids automatically. Essentially, Google compares your conversion history with the budget declared by the advertiser to build tailored campaigns.
In short, the ultimate goal of target CPA is to get as many conversions as possible at the price you set manually.
Why choose CPA
CPA is also a pricing model. In particular, it’s one of the most advantageous for advertisers, who pay only when the goal is reached.
In this case, it’s the publisher (the partner agency) that bears the greater risk.
Experience, management skills and constant data monitoring are the only ways to improve the odds of success.