Cost Per Action
CPA is the acronym for Cost Per Action.
What is Cost Per Action?
A pricing model in digital advertising where the advertiser pays for each specified action linked to an advertisement. These actions can include a sale, a click, a form submission (e.g., newsletter sign-up, registration for a trial), or any other action deemed valuable by the advertiser.
The formula to calculate CPA is quite straightforward:
In this formula:
- Total Cost of Campaign is the entire amount spent on the advertising campaign.
- Number of Actions refers to the total number of times users completed the desired action.
For instance, if an advertiser spends $1000 on a campaign and gets 50 sign-ups (actions), the CPA would be $1000 / 50 = $20 per action.
CPA is vital because it helps evaluate the cost-effectiveness and profitability of a marketing campaign. Lower CPA means your campaign is getting more actions for less cost, which is typically desirable. This metric is especially crucial when optimizing campaigns for maximum ROI, ensuring that the cost of acquiring customers or leads does not exceed the value they bring to the business.
- Abbreviation: CPA
- Source: CPA Calculator