Glossary

CPA (cost per acquisition)

Updated

CPA (cost per acquisition): CPA, cost per acquisition, is what a brand pays for each conversion it gets, such as a sale, a sign-up or an install.

CPA answers one question: what did each result cost? Google defines average CPA as the average amount charged for a conversion from an ad, calculated as total spend divided by the number of conversions (Google). A target CPA is the number a brand wants to hit; the actual CPA is what happened.

In creator deals the same idea shows up as a fixed amount per order. “We pay $20 per attributed sale” is a CPA deal, with the creator as the channel. Marketplaces and affiliate networks call the same thing a per-order bounty or a flat per-order commission.

Example. A brand sets a $20 per-order commission for creators. In a month, creator links and codes bring 30 orders. The brand pays $600, so its creator CPA is $20 by construction. The same month it spends $2,400 on its own ads for 80 orders, a $30 CPA. If the brand’s gross profit per order is $35, both channels are profitable on the first order, and the creator channel more so. Example numbers.

When brands use it. The pain this answers: “Why add to my CPA when I can just pay $200-300 a video?” A fixed per-order amount is easier to explain to creators than a percentage, and it protects the brand when discount codes or bundles move the order value around. It fits products with a steady price point. Brands compare the creator CPA with the CPA of their paid channels, and with the gross profit of a first order, to decide what they can afford.

The creator’s view. The per-order amount only means something next to the price. $20 on a $150 order is a fair affiliate rate; $20 on a $400 order is a low one. Creators should also check what counts as an acquisition: a paid order, a free trial, or an order that survives the return window.

Related terms

Sources

  1. Google Ads Help, Average cost per action (CPA) · support.google.com