The total cost of a marketing campaign is divided by the number of conversions to arrive at the cost per acquisition (or new customers acquired).
The costs should include not just the expense of producing the marketing campaigns, but also the time and energy invested in creating them as well as the actual cost of getting them up and running.
The formula for CPA is as follows:
Total Cost of a Campaign multiplied by the number of conversions = CPA.
To better understand this metric, consider the following example. Assume you're running an Instagram advertisement for your online store that sells Bags & Wallets, and your total campaign budget is $700. You find out at the end of the campaign that it resulted in 40 sales.
So, what is the cost per acquisition (CPA) for this campaign? The cost of the campaign was $ 700, and the conversion rate was 40, resulting in a CPA of $17.5.
