Cost per Action

Impressions and clicks are easy to count, so they came first. The trouble was that those numbers could look good while signups didn't move. A cheap click means it's cheap to get the ad pressed; whether the person who pressed it signs up is a separate question.

Put two ads side by side and the gap shows. A costs $0.18 a click and B costs $0.46, so A looks cheaper. Count through to signups and A takes 40 clicks per signup while B takes 8. Per signup, A is $7.20 and B is $3.70. On clicks A wins; on actions B is nearly twice as good.

CPA moves the unit of counting from the click to the action. It changes the accounting from buying advertising to buying results.

Divide what the campaign spent by the number of target actions it produced. Spend $1,800, get 250, and it's $7.20.

Two things have to be settled before the arithmetic.

The first is what counts as one action. Use signup and the number comes out low; use payment and it comes out high. The two figures for one campaign can sit three times apart, so putting values with different bases in the same table flips the conclusion. Write down what was counted next to each number.

The second is the attribution window — how many days after seeing the ad an action still belongs to it. Seven days and thirty days give different answers for the same campaign, and a short window on a product people deliberate over makes advertising's share look smaller than it was.

The name collides with something, too. Platforms selling inventory that only charges when a conversion happens also call that CPA. The metric and the pricing model share a name, and which one is meant comes from context.

"A is cheaper per click and B is half the CPA."

Cheap clicks don't translate into cheap results.

"This campaign's CPA is $23 and a customer pays us $18 over six months."

What it costs to acquire exceeds what the customer brings in.

"Don't put a signup-based CPA next to a payment-based one."

Different definitions of one action make the comparison meaningless.

At Pagedeck, the table Ravi put together after a month of two ads had cost per click and CPA side by side. One was half the price per click and the worse of the two on CPA, and budget moved to the other.

Grace asked one more thing of that table: whether the CPA sits below what a customer actually pays. When acquisition costs more than it brings in, the better the campaign runs the faster the losses grow.