CPA comes up a lot when we talk about Digital Marketing, but what is it? What does it mean, and why is it important?
Let’s first define CPA. What is Cost Per Acquisition? The technical definition of CPA is best summed up by saying:
The average amount it costs to acquire a conversion through paid activity. – The Internet
Ok, that is a good place to start but if you really need to understand this term and use it to your advantage when you encounter it in the “wild” we are going to need to do a deeper dive. Digital Marketing has a lot of jargon to navigate and it can mean different things depending on where it is being used and what your goals are. For example CPA may mean different things to an SEO (Search engine Optimizer) than it does to an SMM (Social Media Manager) and something else entirely to a website developer, app developer, or a traditional marketer. For our purposes in this article page, we are going to take the 10,000-foot view and focus on the general digital media perspective. If this leaves you with any questions please don’t hesitate to ask! We love to respond with more specific follow-up content that may be helpful to you.
Ok, so back to “CPA” What is it? Why is it important and how can I use it to best serve my digital marketing or website management needs?
Why do we talk about CPA and use it in Digital Marketing?
Cost Per Acquisition measures the success of various paid marketing channels such as PPC (pay per click), affiliate, display, social media, and content marketing. To calculate your advertising campaign’s cost per acquisition, take your total advertising spend and divide it by the total number of successful conversions which might be sales, leads or actions taken on your website. In other words, it is a marketing metric that measures the aggregate cost to acquire one paying customer on a campaign or channel.
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