What is the Profit for CPA Marketing
Online Marketing Wiki: Cost per Action (CPA) explained
What is the CPA?
In online marketing - especially in Search Engine Advertising (SEA) - the so-called CPA is often used. The CPA stands for the "Cost per Action", i.e. the value that an action cost on average. In this article you will find out what that means exactly and how it is measured.
What exactly does CPA mean?
Definition: The CPA stands for Cost per action and describes in online marketing the average value of how much it cost to make an action such as a purchase, a booking or an inquiry. Usually, the CPA is calculated over a certain period of time, for example over the past months or quarters. In contrast to the cost per click, the number of clicks on advertisements is rather irrelevant, but the result of sales, bookings and inquiries is decisive.
In addition to the cost per click (CPC) and the return on advertising spend (ROAS), the cost per action (CPA) is one of the most important metrics for successful marketing campaigns.
How is the CPA calculated?
The CPA is calculated roughly as follows:
Number of budget spent ÷ number of all actions= CPA
Example: If advertisements with a value of 200 euros are placed in one month and 80 sales, bookings and / or inquiries have been generated, the CPA is 2.50 euros. An action then cost an average of 2.50 euros, which then means cost per action.
What can I use the CPA for?
If you add other values to the calculation, such as the sales generated or the shipping costs, you can make statements about how successful a marketing campaign is.
To stay with the example: If 80 sales of a certain product with a value of 10 euros were made with the 200 euros, the result is a turnover of 2,000 euros. If you add the shipping costs of 2 euros and processing costs of one euro per product sold, the result is a profit of 7 euros. If the value of the product is less than 7 euros, it generates a profit and the campaign was successful. If the value of the goods is higher than these 7 euros, this marketing campaign is too expensive and should either be massively optimized or discontinued.
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