Definition: It is metric used
in online advertising that measures the cost to obtain one paying customer from an advertising campaign, a sale, click, newsletter etc.
CPA stands for Cost Per Acquisition it can also stand for Cost Per Action while CPA can also be known as Pay Per Acquisition (PPA) and Cost Per Conversion.
The advertiser pays for each acquisition/action and with the conversion rate we can calculate the CPA. It is important to know, as what you are paying per ad to get a visitor may not equate to a conversion.
Generally, companies have many promotions in various forms running. Calculating CPA per each venture helps in deciding if one form of marketing is not working as the CPA is too high.
Some of the markets where a CPA can be used are
If you were to pay $4 per click , sounds like a good deal although the question is how many of your visitors are you converting, if the percentage is low the actual cost per customer can be quite high.
The definition of a customer may change but the idea is the same, it is important to take CPA into account when paying for ads.
If you would like to calculate your Click through rate , try our Click Through Rate Calculator.
CPA Formula:(Total amount spent on Ads )/(Total amount of conversions)
How to calculate CPA
Lets use an example of if we payed $2000 for clicks. Gaining 500 users but the conversion is 2% which is equal to 10 customers, in this case it is costing $200 per customer which is your CPA.
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