Why is CPA an important metric?
Posted: Mon Jan 20, 2025 6:45 am
Cost per acquisition (CPA) is a marketing metric that measures how much it costs to get a conversion from your advertising. A "conversion" is any time a customer takes an action, such as making an inquiry or purchasing an item on your website.
CPA Formula
Cost per conversion = Total advertising cost ÷ Number of conversions
For example, if you spend $3,000 on an ad campaign on Facebook and Google and get 50 conversions from that ad, your CPA is $60. If that ad only generates 20 conversions, your CPA is $150. So, the higher the CPA, the more it costs to receive an inquiry (or order).
CPA allows you to easily measure the effectiveness of your advertising costa rica telegram number database campaigns and compare the ROI of different channels. For example, if you find that your CPA on Facebook is much lower than on Google, then you may want to invest more of your budget into Facebook advertising.
What makes a good CPA?
What qualifies as a high-quality CPA really depends - there is no universal benchmark for CPA. But you can determine if it's a good result by considering the following factors.
How important are your profit margins? Can you sacrifice some profit for brand awareness?
How big is your marketing budget?
How do you define a conversion? (An inquiry is harder to receive than an email subscription, so the CTR will naturally be lower).
What is ROAS?
ROAS or “Return on Advertising Spend” is defined as the total revenue generated by advertising.
ROAS Formula
ROAS = (Ad Revenue ÷ Ad Cost)
CPA Formula
Cost per conversion = Total advertising cost ÷ Number of conversions
For example, if you spend $3,000 on an ad campaign on Facebook and Google and get 50 conversions from that ad, your CPA is $60. If that ad only generates 20 conversions, your CPA is $150. So, the higher the CPA, the more it costs to receive an inquiry (or order).
CPA allows you to easily measure the effectiveness of your advertising costa rica telegram number database campaigns and compare the ROI of different channels. For example, if you find that your CPA on Facebook is much lower than on Google, then you may want to invest more of your budget into Facebook advertising.
What makes a good CPA?
What qualifies as a high-quality CPA really depends - there is no universal benchmark for CPA. But you can determine if it's a good result by considering the following factors.
How important are your profit margins? Can you sacrifice some profit for brand awareness?
How big is your marketing budget?
How do you define a conversion? (An inquiry is harder to receive than an email subscription, so the CTR will naturally be lower).
What is ROAS?
ROAS or “Return on Advertising Spend” is defined as the total revenue generated by advertising.
ROAS Formula
ROAS = (Ad Revenue ÷ Ad Cost)