Cost Per Acquisition (CPA)
The average cost to acquire one customer through a specific marketing campaign or channel.
Definition
Cost Per Acquisition (CPA) measures the aggregate cost to acquire one paying customer on a campaign or channel level. It's calculated by dividing total campaign cost by the number of conversions. CPA is crucial for understanding the true ROI of marketing efforts and is used to optimize campaigns and allocate budgets across channels.
Why It Matters
CPA is the north star metric for performance marketing because it directly connects advertising spend to business outcomes. While metrics like clicks and impressions are useful, CPA tells you the actual cost of acquiring a customer or lead.
Understanding and optimizing CPA enables businesses to scale profitably. When you know exactly what a customer is worth and what it costs to acquire them, you can make confident decisions about marketing investment and channel allocation.
Examples in Practice
An online education company discovers their Facebook CPA is $45 vs. Google's $120, prompting a budget reallocation that doubles enrollments.
A subscription box service realizes their CPA is $60 but customer lifetime value is $400, giving them confidence to scale aggressively.
A B2B company tracks CPA by lead source and discovers webinar attendees convert at 5x the rate of content downloads, reshaping their content strategy.