Paid Advertising

CPA — Cost Per Action

The cost an advertiser pays for each completed conversion or desired action.

Definition

Cost Per Action (CPA), also called Cost Per Acquisition or Cost Per Conversion, is an advertising pricing model where advertisers pay only when a user completes a defined action. That action could be a purchase, form submission, app install, phone call, or newsletter sign-up — any measurable conversion event. CPA is the most performance-driven model because you only pay for actual results. It's calculated from your total spend divided by the number of conversions, and is closely tied to your return on ad spend (ROAS).

Formula

CPA = Total Ad Spend ÷ Number of Conversions

Divide your total ad spend by the number of completed actions (conversions).

Example

If you spend $1,000 and generate 40 purchases, your CPA = $1,000 ÷ 40 = $25.00 per acquisition. Each customer cost you $25 to acquire.

Key Points

CPA directly measures acquisition efficiency
Your target CPA should be below your average order value or LTV to remain profitable
CPA is influenced by landing page quality, offer relevance, and audience targeting
Automated bidding strategies (Target CPA on Google) optimize toward this metric
Compare CPA to Customer Lifetime Value to assess long-term profitability