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CPA (Cost per Acquisition) Definition
Cost per Acquisition (CPA) measures the average cost of acquiring a customer or completing a conversion action, such as sign-ups, purchases, or downloads. It's a key metric for evaluating campaign profitability and efficiency.
How CPA Works
- Advertisers set conversion goals (e.g., leads, sales).
- Platforms track conversions from ads or campaigns.
- CPA = Total ad spend ÷ Total conversions.
- Marketers optimize targeting, creatives, and bids to lower CPA.
Example of CPA
A lead generation campaign spends $500 and generates 50 leads, resulting in a $10 CPA.
Why CPA Matters in Advertising
- Indicates the efficiency of marketing spend
- Guides budget allocation based on acquisition costs
- Lower CPA improves ROI and profitability
- Essential for performance-focused advertising strategies
