Cost Per Acquisition

By July 14, 2020 No Comments

Glossary

A knowledge hub for digital marketers.

Cost Per Acquisition

Cost per acquisition, also known as cost per conversion, is a growth marketing metric that measures the aggregate cost of a user taking an action that leads to a conversion. The conversion can be one of many things, but in most cases, it is likely to be a sale, a purchase, a click, a sign-up, a form submission, or an app download.  

CPA = Total Advertising Cost/Total Number of Conversions

For example, you run an ad campaign on Facebook, Twitter, and Google to promote your online eCommerce business for a period of 7 days. Your total advertising cost is $1000 and you had about 50 conversions. Then your CPA is $20 ($1000/50)

CPA is a vital metric for every business and provides the business perspective by which you can gauge your campaign success. However, most marketers focus on traffic and sales acquisition and don’t think about cost optimization. Focusing on cost optimization and reducing the cost per acquisition can increase your return on investment (ROI) within a relatively short period.

Cost Per Acquisition is an important metric because it is used in the following paid marketing activities:

  • PPC
  • Affiliate
  • Display
  • Social Media
  • Content Marketing

How to Track Cost Per Acquisition (CPA):

Digital-first businesses track cost per acquisition through a variety of methods, such as:

  • Leveraging UTM parameters to generate link codes for social media or affiliate marketing
  • Exporting PPC campaign data from AdWords
  • Using promotional codes in order to build custom links for internal campaigns
  • Implementing an effective CRM system
  • Including a form field on lead forms that asks customers how they found out about a campaign. Doing this in minimizing the lead attribution gaps