It is a billing model that is useful for your company's profit and for measuring the effect of your marketing. In AdWords, CPA is calculated by dividing your total costs to Google by the number of conversions, i.e. the number of completed actions that are tracked – for example, a sale, a customer enquiry or sign-ups. This way, you find out how much you are paying per customer visit. If you are in doubt about the value of your customers visiting your website, you can advantageously use CPA in Google AdWords.
With CPA, there is a kind of "no cure no pay" model, which means no costs for you as a product or service provider, unless revenue is generated. CPA is therefore a way to measure the effect of a marketing campaign. In practice, it works in such a way that a user sees an ad or link. The person clicks and makes a purchase. The medium or your website is informed of the order, after which a transaction takes place at the agreed CPA.
Overall, CPA, or Cost Per Acquisition, is a billing model for your marketing campaigns. It is a model focused on how you can achieve increased sales. The billing method works as follows: a consumer sees your ad, the person clicks on the link, and the consumer thereby makes a conversion, i.e. an order. The provider of the product receives the order, and the advertising medium is then notified that a purchase has been completed. Finally, the transaction is completed between the company and the advertising medium, where the provider pays the advertising medium. The advertising media can, for example, be Google Ads, Facebook and much more.
If you want to optimise AdWords based on CPA, it is important that you know the value of your lead. Focus on the campaigns that give the lowest CPA. There is no real right or wrong CPA target – it depends on the type of business. Use CPA when you do not know the value of your customers. You can use the CPA tracker in Google AdWords if you wish.
