What Is Cost Per Action?
Cost Per Action (CPA) is calculated by dividing the total cost of a marketing campaign by the number of actions (conversions) it generated. CPA measures the cost of acquiring a customer or converting a potential customer into a paying customer.
Traditionally, the formula for CPA is:
\(CPA=(\frac{\text{Campaign Expenses}}{\text{Number of Actions}})\)
Where:
- Campaign Expenses - Traditionally, this is the cost of the campaign. Companies also have salary and platform expenses that should be included but are often overlooked.
- Number of Actions - An action could be a sale, a lead, a download, a sign-up, a conversion, etc.
Cost Per Action is a KPI used in online advertising and marketing to measure the cost of each action taken as a result of a marketing campaign. By monitoring CPA, businesses can determine the cost-effectiveness of different marketing channels and campaigns, compare the performance of different advertising sources, and optimize their marketing efforts to maximize their return on investment (ROI).
This information can be used to make informed decisions about budget allocation, human resource allocation, platforms and technology costs, campaign optimization, and future marketing strategies.
What Are Typical CPAs By Industry?
The average CPA varies greatly depending on the industry, the target audience, and the type of action being taken. Here are some rough averages for some common industries:
- E-commerce: The average CPA for an e-commerce website is around $60 - $120, but it can be higher or lower depending on the niche and target audience.
- B2B SaaS: The average CPA for a B2B SaaS company is around $100 - $300, but it can be higher for more complex solutions and lower for simpler products.
- Lead Generation: The average CPA for lead generation campaigns can range from $10 to $200 or more, depending on the industry, target audience, and quality of leads.
- Gaming: The average CPA for a mobile gaming app can range from $1 to $10, but it can be higher for more complex games and lower for simple games with a wider audience.
- Healthcare: The average CPA for a healthcare company can range from $50 to $200 or more, depending on the target audience and the type of action being taken.
These are just rough averages. Actual CPAs can vary widely based on a variety of factors. It's also important to remember that a lower CPA doesn't always mean a better campaign. A high CPA could indicate a highly targeted and more profitable campaign.
