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What is cost per acquisition (CPA) and how is it calculated?
CPA is a marketing metric that measures the total cost to acquire a new customer via a marketing or channel campaign. Understanding the cost required to gain new customers allows you to directly measure the impact of different campaigns. You can calculate this metric by dividing your total campaign cost by the total number of conversions gained from the campaign.
Why is CPA important?
While traffic and sales are key metrics to understand, they aren't the entire picture. Understanding your CPA allows you to optimize costs and quantify the return on your marketing investment -- is the juice worth the squeeze, so to speak. Once you know the costs related to customer acquisition, you can compare it to their expected lifetime value and make corrections to you campaigns. A sales channel with a relatively high CPA but low customer lifetime value may require you to rethink your strategy.
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