The definition of CPA, also known as cost per action, is a payment model for online ads, where the advertiser only pays when said ad generates an action. The term CPA is often used for cost per acquisition. This is because the acquisition is a previously agreed action. But other actions can be filling in forms or sending invitations, etc.
What is intended with the cost per acquisition is to achieve short-term sales, ensuring a profitable ROI for advertisers, since the media will only charge once the sale is made.
The CPA in digital marketing is usually the most advantageous format for the advertiser, above other systems such as CPM (Cost per thousand impressions) or the CPC (Cost per click). The cost per acquisition is used for example in affiliate sales. There is also the possibility of calculating the CPA for the different strategies used in the promotion of the web: banners, natural positioning, Google Adwords, email marketing, etc.
It is necessary for the advertiser to specify the calculation of the average profit obtained for each transaction very well, since the cost per acquisition will reduce that profit margin. It will no longer be profitable when the cost per share is higher than the profit margin for a specific promotional strategy.
The most frequent uses of CPA are in marketing de afiliación and in campaigns of advertising display. For this, dynamic banners are usually used, as well as email marketing with specific promotional campaigns, in order to achieve a higher percentage of sales. It must be said that the cost per acquisition is widely used in marketing campaigns. retargeting or cart recovery.
How to calculate the CPA?
The CPA formula to know the campaign spending is obtained by dividing the total cost of the advertising campaign by the number of conversions. In this way, in a campaign with an expense of 1.000 euros, 200 conversions have been achieved, so the cost per conversion would be:
CPA = Total cost / No. of conversions = 1.000 / 200: 0,50 euros
How to calculate the Cost of Acquisition