Cost Per Acquisition (CPA), explained properly.
What is cost per acquisition (CPA)?
Cost per acquisition (CPA), also called cost per lead (CPL) or cost per conversion, is the total ad spend divided by the number of conversions in a given period. CPA = Total ad spend divided by number of conversions. If you spend £500 and generate 10 leads, your CPA is £50 per lead.
How CPA is calculated
The formula: total ad spend divided by number of conversions equals CPA. If a campaign spent £1,000 and generated 25 conversions, the CPA is £40. CPA can be calculated at any level: account, campaign, ad group, keyword, or even individual ad.
CPA vs ROAS
- **CPA** is best for lead generation, where all conversions have the same type of value (a completed enquiry form). - **ROAS** is better for ecommerce, where conversions have variable monetary values.
What is a good CPA?
It entirely depends on the value of a customer to your business. A solicitor who earns £5,000 from a new client can afford a very different CPA than a local cafe. Calculate your maximum acceptable CPA first: average customer lifetime value multiplied by your target margin, divided by your typical lead-to-customer conversion rate.
What counts as acquisition?
Whatever your conversion goal is. For ecommerce, usually a sale. For lead generation, a form submission or qualified lead. For SaaS, often a signup or trial activation. CPA is meaningful only when the conversion being measured is itself meaningful; tracking newsletter signups as primary conversions inflates conversion counts and distorts CPA.
CPA and Target CPA bidding
Once you have a reliable CPA from historical data, you can use Target CPA bidding to automate bid management around that goal.
How to lower CPA
1. **Improve Quality Score.** Lower CPCs flow directly to lower CPA. 2. **Tighten targeting.** Layer audiences onto Search campaigns to focus spend on higher-intent users. 3. **Strengthen conversion rate.** Better landing pages convert more clicks into conversions, lowering CPA without changing CPC. 4. **Cut wasted spend.** Negative keywords, dayparting, and device adjustments stop budget going to searches that never convert. 5. **Use Smart Bidding.** Target CPA bidding (once you have steady conversion volume) typically beats manual at scale. CPA is the metric that ties paid search to actual business outcomes. Most accounts have hidden CPA leverage in Quality Score, conversion rate, and Search Terms cleanup. Tracking and reducing CPA over time is central to our PPC management service.
Cost Per Acquisition (CPA): common questions.
What is a good CPA?
Depends entirely on what a customer is worth to you. A solicitor with a £3,000 average client value can afford a £200 CPA and still be profitable. An ecommerce store selling £30 products needs CPA below £15 to make sense. The rule is: CPA must be lower than your customer lifetime value, with enough margin to cover other costs.
CPA vs CPC, which matters more?
CPA. CPC is just one input. CPA is the outcome. A campaign with low CPC and a terrible conversion rate has a high CPA; a campaign with higher CPC but a much better conversion rate has a lower CPA. Always optimise toward CPA, not CPC.
How is target CPA different from CPA?
Target CPA is the price you tell Google you are willing to pay per conversion (used in Smart Bidding). Actual CPA is what you ended up paying once results came in. The two should converge over time but Target CPA is a setting; CPA is a measurement.
Can I have different CPA targets for different campaigns?
Yes, and you usually should. Brand campaigns have very low CPAs because intent is high. Acquisition campaigns naturally have higher CPAs because the audience is colder. Setting a single CPA target across both blends them and limits each.
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