Define Cost Per Acquisition (CPA)

What is cost per acquisition?

Cost per acquisition (CPA) is a pricing model that refers to the total cost of a sales conversion from start to finish. Cost per acquisition, also known as cost per action, includes, but may not be limited to, the following:

  • Marketing costs such as search engine results, promotional materials, ad rank
  • Cost of the marketing team
  • Creative costs
  • Technical costs
  • Inventory upkeep
  • Advertising costs
  • Cost of the sales team

Are there ways to optimize cost per acquisition costs? The good news is there are ways to optimize your costs. Since the goal of a marketing campaign is to generate leads, conversions, and increased revnue, you want to pique the interest of your audience. You want to be able to evoke a feeling and curiousity that makes them visit your website and answer a call-to-action. To get high-quality leads, it depends on the budget you have to work with. The better your budget, the better the leads. What exactly is a lead? A lead is someone who will visit your website and leave their contact information. This information usually consists of an email address, name, and sometimes a phone number. A lead is a person who has the potential to become a customer. Other ways to optimize your costs include:

  • Creating a simple landing page: a landing page doesn’t need to be overwhelming and full of information that isn’t related to your offer. Remove any links that are not related to your offer. This means that visitors will either click out of your landing page or answer your call-to-action.
  • Create a video: video marketing can draw more people to your website, which can increase the time they spend there and even lead to more leads.
  • Take advantage of retargeting: retargeting can help you to reach people who have previously visited your website. Since they have already seen what you have to offer, and possibly begun the buying process, there is a greater chance of them creating a conversion thus reducing your cost of acquisition.

The cost per acquisition model is widely preferred as you have the freedom to decide on the definition of “acquisition” before the campaign begins. You have a clear goal in mind. Other benefits of the cost per acquisition model include:

  • You only pay when your goal is achieved
  • Risk is limited
  • It is an easier model to use than a cost per click model or cost per thousand model
  • You invest in cost-friendly channels of marketing

The disaadvantages of the cost per acquisition model include the time investment. It may take time to optmisize the channels as typically multiple campaigns will be run at once. Another downside has to do with budget. A higher budget can generate better leads. If you are selling high-value products, you will need a good budget to work with to help market them and achieve your goals.

The cost per acquisition model might seem complicated, but it can be one of the most effective marketing models.

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Define Cost Per Acquisition (CPA)

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