What is CPA?
CPA stands for “cost-per-acquisition;” it is also known as cost-per-conversion. This metric tells you exactly how much you spent in order to generate some type of conversion on your website after a click on your ad. The equation to calculate your CPA is fairly basic:
Total Ad Spend / Total Conversions = Overall CPA
This formula can be applied on the keyword, ad group, campaign and full account level.
In general, CPA is a metric that you will want to pay very close attention to. Many experts argue that this number is more important to your account than average Quality Scores, click-through rates, and impressions because it is directly tied to your ROI in paid-search.
As you can imagine, your CPA is typically higher than your average cost-per-click, as not everybody that clicks on your ads will convert. With this in mind, it’s very important to understand your target CPA for each unique conversion that you are trying to attain (purchase, lead, signup, etc.) By tracking your CPA closely, you will be able to determine exactly how beneficial paid-search can be to your business and whether or not you stand to turn a profit by paying for clicks online.
There are a variety of strategies that can contribute to lowering your CPA. In general, raising your conversion rate will lower your CPA. If your clicks and impressions remain consistent, but your conversion rate continues to climb, naturally your CPA will get smaller and smaller. But everybody wants more and better conversions, right? That’s a no-brainer. So let’s start small and then work our way up to some more general strategies that will all contribute to a better conversion rate and lower CPA.
