Definition: Cost Per Acquisition, or "CPA," is a marketing metric that measures the aggregate cost to acquire one paying customer on a campaign or channel level. CPA is a vital measurement of marketing success, generally distinguished from Cost of Acquiring Customer (CAC) by its granular application.
Total Campaign Cost
_________________ = CPA
Many marketing metrics are indicators of success, such as conversion rate and visits (or "sessions"). Cost Per Acquisition, on the other hand, is a financial metric used to directly measure the revenue impact of marketing campaigns.
Armed with AOV (average order value) and CLV (Customer Lifetime Value), online businesses can determine an acceptable CPA for ecommerce acquisition. Conversion rates are a primary indicator of marketing success, but CPA provides the business perspective by which to gauge campaign success.
Cost Per Acquisition is used in the following paid marketing mediums:
It can also be used for ecommerce SEO, email, and other platforms without direct advertising costs but that still require overhead (labor, indirect expenses such as content production, etc.).
There is no universal benchmark in ecommerce for a "good" CPA. Every online business has different margins, prices, and operating expenses. The most important factor in determining a desired CPA is understanding these factors, enabling a business to calculate how much they can reasonably afford to pay for acquiring customers. Other influencers include:
Online businesses can track cost per acquisition through a variety of methods, including: