Cost per Acquisition (CPA) is a performance-based advertising model where the advertiser pays a fixed amount for each deal (i.e. lead, sale or sign-up) generated by an ad. CPA is often used in online advertising, where it is also referred to as "cost per action" or "pay per action" (PPA).
With CPA, the advertiser only pays when a specific action is taken, such as a sale, a lead or a sign-up. This differs from other advertising models such as cost per click (CPC) or cost per thousand impressions (CPM), where the advertiser pays for clicks or impressions regardless of whether a purchase is made. The CPA model is advantageous for advertisers because it is more predictable for budgeting and measuring the performance of their campaigns.
The CPA can be determined in different ways depending on the campaign and the advertiser's objectives. For example, an e-commerce website might use CPA to measure the cost of acquiring a customer who makes a purchase. In this case, the CPA would be the total cost of the campaign (e.g. advertising costs) divided by the number of customers acquired.
Another example would be lead generation companies using CPA to price their services. They would determine the cost per lead by dividing the total cost of the campaign by the number of leads generated.
CPA is often used in affiliate marketing, where affiliates receive a fixed amount for each acquisition they generate. In this case, the CPA is set by the advertiser and can vary depending on the offer, affiliate and traffic source.
Overall, the CPA advertising model can be a good choice for companies looking for a more predictable way to measure the ROI of their marketing efforts, especially for lead generation or e-commerce.
