CPA (Cost Per Acquisition) is the advertising cost required to acquire one conversion (result). It is one of the most important metrics for measuring advertising cost-effectiveness.
Formula
CPA ($) = Total Advertising Cost ÷ Number of Conversions
Example Calculation
If advertising cost is $5,000 and conversions are 50:
CPA = $5,000 ÷ 50 = $100
This shows it costs $100 to acquire one conversion.
Guidelines and Criteria
Appropriate CPA varies greatly by industry and product:
• E-commerce: 10-30% of product price is typical
• Lead generation (B2B): Ideally less than 1/3 of LTV (Lifetime Value)
• App installs: $0.10-$30 (varies by app type)
What's important is whether CPA is below the profit gained from customers (LTV). If CPA < LTV, the advertising investment is generating profit.