What is cost per acquisition?

One of the most important questions any business running paid advertising needs to answer is how much it costs to acquire a customer through that channel. Cost per acquisition — or CPA — is the metric that answers this, and understanding it is essential for assessing whether a paid marketing channel is financially viable for a particular business.

Cost per acquisition is the total amount spent on marketing divided by the number of new customers or conversions that spending generated during the same period. It is a more meaningful measure of advertising efficiency than impressions or clicks alone, because it relates spend directly to the commercial outcome being pursued. A CPA lower than the value a customer generates creates a profitable acquisition channel; a CPA that exceeds customer value destroys margin.

Calculating CPA accurately requires robust conversion tracking — knowing not just how many people clicked an ad but how many of those clicks led to a purchase or enquiry. CPA varies considerably between industries, channels, and offer types, so benchmarks from other businesses are rarely directly applicable. Our guide to cost per acquisition for UK founders covers how to calculate it, what it tells you, and how to improve it.