Cost Per Acquisition (CPA) refers to a key performance metric used in marketing and advertising to measure the total cost associated with acquiring a new customer or achieving a specific conversion goal. It is calculated by dividing the total cost of a marketing campaign by the number of new customers or conversions acquired through that campaign.
Formula:
CPA = Total Cost of Campaign / Number of Acquisitions
For example, if a company spends $1,000 on a marketing campaign and acquires 50 new customers, the CPA would be $20. This metric helps businesses understand the efficiency of their marketing efforts and is crucial for budgeting and evaluating the return on investment (ROI) of advertising strategies.