Cost-Per-Acquisition (CPA) is a key metric in digital marketing that measures the total cost of acquiring a new customer or lead. It represents the amount of money a business spends to get a customer to take a specific action, such as making a purchase, signing up for a newsletter, or filling out a contact form. Understanding your CPA is crucial for determining the efficiency of your marketing campaigns. A lower CPA means you're spending less to gain new customers, which typically indicates that your marketing efforts are effective. Conversely, a high CPA can suggest that you need to optimize your campaigns or rethink your strategy.
To calculate CPA, you divide the total cost of your marketing campaign by the number of conversions (or actions) it generated. The formula is:
CPA= Total Campaign Cost​ / Number of Conversions
For example, if you spent $1,000 on a campaign and gained 50 new customers, your CPA would be $20.
Cost-Per-Acquisition is a vital metric for any e-commerce business looking to grow efficiently. By keeping track of and optimizing your CPA, you ensure that your marketing budget is being spent wisely, helping your business thrive.
