Cost-per-Acquisition (CPA) is a pricing model used in online advertising that refers to the cost of acquiring a paying customer through an advertisement. Unlike Cost per Click (CPC) or Cost per Impression (CPM), where the advertiser pays each time the ad is clicked or viewed, respectively, CPA only requires payment when a specified action is taken, such as making a purchase, signing up for a newsletter, or filling out a form.
Cost Per Acquisition (CPA)is calculated by dividing the total cost of an advertising campaign by the number of paying customers acquired through the campaign. For example, if an advertiser spent $1000 on an advertising campaign and acquired 50 paying customers, the CPA would be $20 ($1000 / 50).
Cost Per Acquisition (CPA) has often been considered a more effective pricing model than CPC or CPM for businesses focused on customer acquisition and generating revenue, as it aligns the interests of the advertiser and the publisher. Advertisers only pay for results, while publishers are motivated to generate high-quality leads that are likely to convert into paying customers.
Optimizing CPA by continuously testing different ad formats, targeting strategies, and creatives are important to find the combination that provides the best results at the lowest cost. This requires regularly tracking, analyzing, and adjusting advertising campaigns to ensure they deliver the desired results and generate a positive return on investment.
Also, See: Enhanced CPC