Cost Per Acquisition — the average cost to acquire one customer or lead.
Cost Per Acquisition (CPA) is the total marketing cost divided by the number of new customers or conversions acquired. CPA = Total Marketing Spend / Number of Conversions. Also called Cost Per Conversion or Cost Per Action, CPA is a key efficiency metric for performance marketing campaigns. Minimising CPA while maintaining volume is a central challenge in digital advertising.
CPA determines whether your marketing is profitable. If your average customer lifetime value is $1,000 and your CPA is $200, you have a healthy 5:1 LTV:CPA ratio. If CPA exceeds LTV, you're losing money on every customer acquired.
If you spend $10,000 on Google Ads and acquire 50 new customers, your CPA is $200. If each customer generates $600 in revenue, your ROI is positive.
CPA is broader — it measures the cost of any acquisition (lead, signup, purchase). CAC (Customer Acquisition Cost) specifically measures the total cost to acquire a paying customer, including all marketing and sales expenses.
CAC
Customer Acquisition Cost — total cost to acquire one paying customer.
ROAS
Return On Ad Spend — revenue earned for every dollar spent on advertising.
ROI
Return on Investment — net profit divided by the cost of the investment, expressed as a percentage.
Conversion Rate
The percentage of visitors who complete a desired action (purchase, signup, etc.).
Performance Marketing
Advertising where brands pay only when a specific action (click, lead, sale) occurs.