Cost Per Acquisition
Definition
The cost of getting someone to take a specific action, like making a purchase or signing up. Used in advertising to measure campaign efficiency.
What is Cost Per Acquisition?
Cost Per Acquisition (CPA) measures how much you pay to get someone to complete a desired action. That action could be a purchase, signup, download, or any other conversion you're tracking.
In advertising platforms like Google Ads, CPA is a key metric for understanding campaign performance.
CPA vs. CAC
These terms are often confused:
| Metric | What It Measures |
|---|---|
| CPA | Cost per specific action (any conversion) |
| CAC | Cost to acquire a paying customer specifically |
CPA is broader. You might track CPA for email signups (£2 each) and separately for sales (£80 each).
How to Calculate CPA
Total spend / Number of conversions
Example:
- Ad spend: £1,000
- Sales made: 25
- CPA = £1,000 / 25 = £40
What's a Good CPA?
Your CPA should be lower than the value of the action. If a sale is worth £100 in profit and your CPA is £40, you're making £60 per conversion.
Typical CPA varies wildly by industry:
- Ecommerce: £10-50
- B2B services: £50-200
- Legal services: £100-500
- Software: £50-150
CPA Bidding
Google Ads and Facebook offer "Target CPA" bidding. You tell the platform what you want to pay per conversion, and it optimises automatically.
This works well when:
- You have enough conversion data (usually 30+ per month)
- Your target CPA is realistic
- Your tracking is accurate
Reducing CPA
- Improve ad targeting
- Write better ad copy
- Optimise landing pages
- Test different offers
- Exclude poor-performing audiences