Cost per acquisition (CPA)

The CPA is calculated by dividing the total costs of an advertising campaign by the number of acquisitions (customer acquisitions or desired actions). This key figure enables marketers to evaluate and compare the success of different advertising measures by relating the efficiency of the resources used directly to the results achieved. A low CPA indicates that the cost of acquiring a customer or achieving a desired action is relatively low, which is generally considered a sign of an efficient campaign.

Formula for calculating the CPA: Costs / Conversions = CPA

An example: The budget of a campaign was 10,000 euros. 200 forms were filled out. Each action therefore cost 50 euros - the CPA.

The CPA is of central importance for companies and marketers for several reasons:

• Budget optimization: By understanding and monitoring the CPA of their campaigns, companies can allocate their budgets more efficiently and make adjustments where necessary to reduce costs and maximize ROI (return on investment).
• Performance comparison: CPA makes it possible to directly compare the performance of different advertising channels (e.g. search engine advertising, social media, affiliate marketing), which is helpful when making decisions for future campaign strategies.
• Target orientation: By setting CPA targets, companies can define concrete performance targets based on realistic budget considerations and profit expectations. This helps to manage marketing activities in a targeted manner.

To effectively manage and optimize CPA, companies and marketers use various strategies:

The Target CPA (Cost per Acquisition) bidding strategy in Google Ads is an advanced approach that aims to help advertisers optimize their customer acquisition costs. By defining a smart bidding strategy with target CPA, the advertiser tells Google Ads how much it is worth on average to acquire a customer or perform a certain action. Based on this information, Google Ads uses machine learning and algorithms to automatically adjust the bids for each ad auction so that the specified target CPA is met as far as possible. This allows advertisers to make their advertising spend more efficient as Google Ads is designed to maximize the number of conversions or conversion value (revenue) at the set cost point. The strategy takes into account various factors such as the search behaviour and device usage of potential customers in order to optimize bids according to the highest probability of conversion. This allows advertisers to achieve their advertising goals while maintaining control over their spend.