What is a cost per acquisition?
We explain what a CPA is in digital marketing and how to calculate it
Cost per acquisition formula
To calculate cost per acquisition, you will need the following metrics:
1. Budget / ad spend
Buying impressions and inventory on a CPA basis
The majority of impressions are bought on a CPM or CPC basis. Another method of buying impressions is on a CPA basis, which means you only pay for when the impressions drive a conversion. The benefit of this method is that you know exactly how much you are paying for one conversion and can therefore understand the efficiency of the channel or vendor you are using from the beginning.
This is common in affiliate networks, whereby websites will advertise a product or service of another company’s and will earn a commission % off the value of the conversion.
The downside of this is that some of the inventory and websites that your brand will be appearing on may not be as brand safe or premium as others. This means if you wish to shift brand perception, this method of buying is not advised. A CPA buy is far more relevant for performance or direct response campaigns whereby you are purely focused on generating conversions.