CPA (Cost per acquisition)
What is cost per acquisition (CPA)?
Cost per acquisition (CPA) is nothing more than a metric used to determine the cost of converting a customer.
We usually talk about CPA in terms of sales, but this is not always the case. It also applies, for example, to the cost of each of the subscribers who have registered on our subscription form. Subscribers whose emails are used, mainly in email marketing campaigns, to convert them into paying customers.
This is generally the most commonly used system, rather than other conversion models such as CPC or CPM, which are also widely used. This is because you only pay per sale or action you want the customer to take. Cost per acquisition is the model used in affiliate marketing.
1. How to determine the CPA
To find out the CPA of an online marketing campaign, simply divide the total cost of the advertising campaign by the number of conversions obtained. The mathematical formula is very simple:
Total campaign cost / number of conversions = CPA
This type of advertising is undoubtedly the most expensive, but it is very efficient and the investment is easily recovered when the CPA campaign is created correctly.
When creating a cost-per-acquisition campaign, the desired CPA must be taken into account to prevent the cost from skyrocketing and making the campaign unsustainable. The target CPA is nothing more than the average cost you are willing to pay for each acquisition; this is the only way to get the CPA under control.
2. Characteristics of CPA
Cost per acquisition has a number of implicit characteristics that make it very popular:
- You only pay when the customer performs the desired action.
- Due to its high costs, it is only recommended for consolidated companies.
- Widely used in SEM, SEO, banner ads, email marketing, etc.
- It offers a very interesting ROI.
- It allows you to easily measure elements such as the cost of the campaign, per ad and sales made.
- It is not the best option for branding campaigns, for which CPM is bmore recommended.
- It helps you plan new actions wisely.