What is CPA or Cost Per Action?
Miguel Nicolás
26/02/2018
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Do you know the concept of Cost Per Action? It would be very useful to know. We tell you what is CPA so that you can start measuring right now.
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We talked about CPA or Cost Per Action, which is one of the most important metrics in evaluating an action or strategy´s success. We will clarify the concept so that you understand it clearly.
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What is CPA?
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In a nutshell, we can say that it is the assumed cost to be invest in order to become a user to a new client. Unlike other many metrics which are usually a percentage, in this case we speak of an absolute number. It is important to keep that in mind.In marketing, all action involves an investment, and that is especially clear when we talk about acquisition.Calculating it is really simple: If our Adwords campaign has resulted in a total investment of € 1,000 during the month of February and we have won a total of 50 conversions, we only have to divide the cost by the number of conversions, and we will know that the CPA is €20.Obviously, the lower CPA is, the better.The equation can get a little more complicated, although the way of getting the result is the same. If we want to have a more real figure, to this CPA we might call gross, we should apply all the expenses to it and not only the investment (e.g. hours worked by the account manager).
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Why is Cost per Action so important?
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It is by itself the best way to evaluate the performance of a campaign aimed at conversion. When we talk about another type of objectives, such as branding, this CPA becomes more diffuse and it is not so easy to measure.Controlling CPA means that we can make more effective decisions in any channel. It tends to be associated with PPC because it is measured in a very direct way. But it can be applied to Social Media, SEO, or any channel within an investment and we have clear how many conversions concerns.If you want to know more about CPA, check this post out
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