Cost per acquisition

What it means

CPA, cost per acquisition, is how much a company pays in advertising to gain one customer, order or other conversion. It is campaign cost divided by the number of conversions, so a campaign costing 1,000 euros that brings 50 orders has a CPA of 20 euros.

The number alone does not say whether a campaign pays off. It has to be compared with margin and customer value: if the first order brings 15 euros of gross profit, a CPA of 20 euros is a loss unless the customer buys again. That is why CPA is read together with ROAS and repeat purchases.

In PPC advertising CPA is also a bidding setting: the advertiser sets a target cost per conversion and the platform adjusts bids itself. CPA is closely tied to the conversion rate, because more buyers at the same cost per click mean a lower cost per acquisition.

How it works in practice

A reliable CPA requires accurate conversion tracking. If the site misses some orders, for example because cookies were declined, CPA looks worse than it is, while duplicate tracking makes it look artificially low. It pays to reconcile ad platform figures with the actual orders in the shop.

Which campaign gets credit for a conversion is decided by the attribution model. A customer often sees a social media ad, later searches for the brand and buys via search, so the last click takes all the credit and the top of the funnel looks needlessly expensive.

The cheapest route to a lower CPA is often the website rather than the ads. Conversion rate optimisation on a product page or in the basket lowers CPA across all channels at once, whereas changing bids affects only one campaign and often only briefly.

What to watch out for

An aggressive CPA target can be met by the platform simply no longer reaching new people and focusing on those who would have bought anyway. The metric improves but total revenue does not grow, so the number of new customers should be tracked too.

For bookkeeping, advertising spend is an ordinary expense regardless of CPA. With ads bought from foreign platforms, however, remember reverse-charge VAT and the registration duties that small firms often overlook when running their first campaigns.