What is Cost Per Acquisition (CPA)?
Cost Per Acquisition (CPA) is a key performance indicator (KPI) used to measure the profitability of online marketing campaigns. The cost per acquisition refers to the cost of acquiring a new customer or user for a business. It is a metric that measures the cost of a promotion, such as a paid advertisement, for each successful conversion. CPA can be used to determine the effectiveness of different ad campaigns and optimize them to maximize the return on investment (ROI).
How to Calculate Cost Per Acquisition
Cost per acquisition (CPA) is calculated by dividing the total cost of a marketing campaign by the total number of customers or users acquired as a result of it. To calculate CPA, you need to first identify the total costs associated with the campaign, including media spend, creative costs, and technology costs. Then, divide the total costs by the number of customers or users acquired.
Examples of Cost Per Acquisition
Below are some examples of CPA calculations:
- A company spends $10,000 on a digital ad campaign and acquires 500 new customers. The CPA for this campaign would be $20 ($10,000 / 500 = $20).
- A company spends $5,000 on a Facebook ad campaign and acquires 100 new customers. The CPA for this campaign would be $50 ($5,000 / 100 = $50).
- A company spends $20,000 on a search engine optimization (SEO) campaign and acquires 400 new customers. The CPA for this campaign would be $50 ($20,000 / 400 = $50).
Conclusion
Cost Per Acquisition (CPA) is an important KPI for measuring the profitability of online marketing campaigns. It is a metric that measures the cost of a promotion for each successful conversion. CPA is calculated by dividing the total cost of a marketing campaign by the total number of customers or users acquired as a result of it. For more information on CPA and other digital marketing metrics, check out the following resources: