Updated on: 2021-11-29
Referred to as: CPA
Category: Paid Search
Correct Use: No specific best use
Description: Cost Per Acquisition or Cost Per Action (CPA) is the amount of spend an advertiser pays to achieve a specific goal, usually to convert a customer but also to drive down a funnel such as sign up for an email newsletter or enter email address to download a white paper etc.
Our take: Measuring paid search metrics such as CPA and CPC is very important if you want to understand how a digital marketing campaign is performing.
You need to know these metrics and the costs, revenue, and profit as well as LTV (Life Time Value) of a specific action or acquisition.
Often times in advertising people only talk about top-line numbers like revenue and very often, with a little bit of back-calculation and reasonable assumptions you can determine that many PPC campaigns are not actually profitable.
Its entirely possible to generate more revenue than ad spend, but you need to generate more profit than ad spend to generate a positive ROI. This is almost never talked about but it’s very important.
Do: Do measure your CPA and CPC from your PPC campaigns! (Man that’s a lot of acronyms and that’s why we created SEOJArgon.com)
Don’t: Don’t just assume because you are generating more revenue than ad spend that its a win! Measure and quantify your ad spend with business goals and metrics.
Tip: Break down PPC ad spend and conversions on a very granular level.
Drill down as deep as you can onto specific demographics, landing pages, devices types, times of day, location etc.
Measure what works, tweak, tweak and tweak again, then put more spend into the areas that are providing positive ROI.
Rinse and repeat!
Introduced:
These metrics came along in the early days of PPC. PPC was first but CPA and CPC came shortly after. Early 2000s if not very late 1990s for these terms.