The Cost per Acquisition (CPA) is the advertising cost that is paid for a sale made. In such a way that only one user is paid for each converted share, which in this case is already considered a customer for the company.
It is one of the preferred by advertisers since they only have to pay if they have really obtained a new user.
This model is the most used in ecommerce . The reason for this is that with the cost per acquisition it is possible to quickly and easily measure the number of transactions made thanks to online advertising.
A digital marketing campaign aims at a sale or conversion. Therefore, this method by acquisition is the ideal model to determine the return on investment (ROI) of any campaign.
In this case, it is easy to know not only what it has cost to carry out the campaign but also the number of sales that have been achieved. A simple division will mark if there has been success or not, it is the clearest way to decide if the disbursement made has been effective and if this will make it possible to recover the amount that has previously been invested in the campaign.
Importance of the client’s life cycle in the CPA
In this method it is very important to make an effective evaluation of the campaign the life cycle of a client.
Correct data will be obtained when contemplating the cost of acquiring a customer and the division between all the purchases that he will carry out throughout his life as a user of the company he follows, with which he has this commercial transaction.
The sale is considered the final conversion and coincides with the end of the conversion funnel. It is not possible to establish a subsequent agreement, because there is only a repeat purchase.
Disadvantages of Cost per Acquisition (CPA)
These are some:
- For a branding campaign it is not the most appropriate model, CPM is preferable.
- It is recommended only for consolidated companies.
Advantages of Cost per Acquisition (CPA)
Among the most outstanding advantages are the following:
- Ensures the profitability of your ROI.
- It is ideal for traffic campaigns or conversions.