Cost Per Acquisition (CPA)
Average cost to gain one customer or completed action.
Formula
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Example
$1,000 for 25 sign-ups → CPA = $40
How it works
Cost Per Acquisition (CPA) tells you how much money you spend, on average, to get one desired result such as a sale, sign-up, download, or lead. It works by dividing the total advertising cost by the number of conversions, which spreads the spending evenly across all successful outcomes. A lower CPA usually means your marketing is becoming more efficient, while a higher CPA means you are paying more for each result.
When to use it
Use CPA when you want to judge the efficiency of an ad campaign or compare different channels, such as search ads, social media ads, or email marketing. It is especially useful whenever you have a clear target action and want to know the cost of producing each one.
Worked example, step by step
Total ad spend = $750 Number of conversions = 15 purchases CPA = Cost ÷ Conversions CPA = 750 ÷ 15 CPA = $50 per purchase
Common mistakes to avoid
- Using clicks or impressions instead of actual conversions
- Forgetting to include all ad costs in the total spend
- Mixing up CPA with customer lifetime value, which measures revenue instead of cost
Did You Know?
CPA ties ad spend directly to results, making it a favourite of performance marketers.
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