Cost per acquisition (CPA)

Cost per acquisition (CPA) or cost per action, is a marketing metric that measures the total cost incurred to acquire a new user or customer through a specific channel or campaign. It is a key metric in mobile marketing that helps marketers understand how much they are spending to acquire each install that converts, and evaluate the performance and profitability of their marketing efforts.

CPA can be considered as a conversion rate-based marketing metric, as it takes into account the entire customer journey from the initial contact to conversion. Unlike other media buying models like cost per click (CPC) or cost per conversion (CPC), which focus on specific actions, CPA provides a more general view of the cost involved in acquiring a paying customer.

The average cost per acquisition can vary depending on the industry and the specific marketing efforts of a company. Mobile marketers need to track and analyze their CPA to ensure that they are optimizing their marketing budget and driving the maximum return on investment (ROI).

Defining CPA in the context of mobile marketing

In the context of mobile marketing, CPA refers to the cost incurred by marketers to acquire a new mobile user through marketing efforts. This can include various channels and campaigns, such as ad campaigns on social media platforms or search engines, email marketing campaigns, content marketing efforts, or organic acquisition.

Mobile marketing has become an essential part of businesses’ marketing strategies due to the growing usage of mobile devices. With the increasing number of mobile users and the availability of various mobile marketing channels, marketers need to carefully analyze their CPA to ensure that they are investing their marketing budget in the most effective channels and campaigns.

The importance of CPA for mobile marketers

Cost per acquisition is of paramount importance for mobile marketers as it directly affects their marketing budget and overall profitability. By understanding and optimizing their CPA, mobile marketers can make informed decisions about allocating their marketing budget, improving their ROI, and maximizing their lifetime value (LTV).

Tracking and analyzing CPA allows mobile marketers to identify the most cost-effective marketing channels and campaigns. By focusing on channels and campaigns with lower CPAs, marketers can allocate their budget more efficiently and generate more revenue from each customer acquisition. This can ultimately lead to higher profitability and a better return on investment.

Moreover, by monitoring CPA, mobile marketers can also identify any areas where their marketing efforts may not be as effective and make necessary adjustments. By constantly evaluating and optimizing their CPA, mobile marketers can ensure that their marketing strategies are aligned with their business goals and drive the maximum value from their marketing budget.

Calculating cost per acquisition is essential for mobile marketers to understand how much they are spending to acquire each customer and evaluate the performance of their marketing efforts. 

By following a basic formula, marketers can easily calculate their CPA and make data-driven decisions to optimize their marketing strategies.

The Basic Formula for CPA Calculation

The basic formula for calculating cost per acquisition is to divide total advertising spend by the number of actions generated. Usually those actions include an app install, of course, but they can include actions such as registration, first purchase, level achievement, or similar. 

This needs to be customized for each app and vertical, but when done, gives marketers a clear understanding of how much they are spending on average to acquire each user or customer.

CPA = Total Advertising Spend / Number of Conversions

For example, if a mobile marketer spends $1,000 on a marketing campaign and generates 100 conversions, the CPA would be $10 per conversion.

It is important to note that the number of conversions can vary depending on the specific marketing campaign or channel being analyzed. Marketers should track and analyze their CPA for each individual campaign or channel to get a comprehensive view of their marketing performance.

Also, if you are achieving many organic conversions, you may have to calculate the cost of activities that support those, such as social media, content creation, community development, and so on.

Examples of CPA calculations in mobile marketing

Here are a few examples of CPA calculations in different mobile marketing scenarios:

1. Google Ads: Suppose a mobile marketer runs a Google Ads campaign with a total budget of $500 and generates 50 conversions. The CPA for this campaign would be $10 per conversion.
2. Social Media: A mobile marketer invests $1,000 in a social media ad campaign and generates 100 conversions. The CPA for this campaign would be $10 per conversion.
3. Ecommerce Business: An ecommerce business spends $2,000 on various marketing campaigns and generates 200 conversions. The average CPA for these campaigns would be $10 per conversion.

Tracking and analyzing CPA in different mobile marketing scenarios can help marketers identify the most effective channels and campaigns for acquiring customers and optimize their marketing budget accordingly.

Reducing cost per acquisition is a key objective for mobile marketers as it can directly impact their marketing budget and overall profitability. By implementing best practices and strategies, mobile marketers can optimize their ad spend and drive down their CPA for better results.

Optimizing ad spend for lower CPA

One of the best practices for reducing cost per acquisition is to optimize ad spend. Marketers can achieve this by targeting the right audience, improving the quality score of their ads, and focusing on channels and campaigns that have a lower CPA.

Targeting the right audience is crucial for reducing CPA. By identifying the target audience that is most likely to convert, marketers can allocate their ad spend more effectively and drive down their CPA. This can be done by analyzing customer demographics, interests, and behaviors to create targeted ad campaigns.

Improving the quality score of ads is another effective way to reduce CPA. The quality score is a rating given by advertising platforms like Google Ads, which determines the relevance and quality of an ad. By optimizing ad copy, landing pages, and user experience, marketers can improve their quality score and lower their CPA.

Targeting and retargeting strategies to improve CPA

Another best practice for reducing cost per acquisition is to implement smart targeting and retargeting strategies. By targeting the right audience and engaging with them through personalized messaging, marketers can increase the likelihood of conversions and lower their CPA. Sometimes this requires exploring new ad partners or even completely new marketing channels.

Targeting involves reaching out to a specific audience segment that is most likely to be interested in a product or service. By understanding customer personas and preferences, marketers can create targeted ad campaigns that resonate with their target audience and drive higher conversion rates.

Retargeting is the process of re-engaging with users who have already interacted with a brand or shown interest in a product or service. By showing relevant ads to these users, marketers can increase the chances of converting them into paying customers, ultimately reducing their CPA.

Some effective targeting and retargeting strategies include creating personalized ad campaigns, optimizing landing pages for better user experience, and implementing lead generation tactics such as email marketing or content marketing.

Implementing cost per acquisition strategies is essential for mobile marketers to optimize their marketing efforts and drive better results. By following a step-by-step guide, beginners can easily implement CPA strategies and improve their marketing performance.

Get started

Before getting started with implementing CPA strategies, mobile marketers will need to have a clear understanding of their marketing metrics, analytics tools, and overall campaign performance. 

This includes having access to data on conversions, advertising spend, customer acquisition cost (CAC), and return on investment (ROI). Clearly, this is something Singular can help with.

Step 1: Identifying target audience

The first step in implementing CPA strategies is to identify the target audience for your mobile marketing campaigns. This involves creating customer personas and understanding the demographics, interests, and behaviors of your ideal customers.

By identifying your target audience, you can create targeted ad campaigns that resonate with them and drive higher conversion rates. This can help you optimize your ad spend and reduce your CPA.

Sometimes the best way to do this is to speak to your best users or customers. Find out who they are, why they use your app or service, and what they get out of it.

Step 2: Selecting the right mobile marketing channels

Once you have identified your target audience, the next step is to select the right mobile marketing channels for your campaigns. This can include social media platforms like Facebook, Instagram, or LinkedIn, search engine advertising like Google Ads, or other channels like email marketing or content marketing.

The best place to identify great new mobile advertising channels is the Singular ROI Index. Sometimes the least-known ad networks provide the best return.

By selecting the right channels that are most relevant to your target audience, you can optimize your ad spend and reduce your CPA. Different channels may have different costs and conversion rates, so it is important to track and analyze the performance of each channel to make data-driven decisions.

Step 3: Creating high-converting ads

Creating high-converting ads is a crucial step in implementing CPA strategies. This involves optimizing ad copy, design, and call-to-action (CTA) to attract and engage your target audience.

By focusing on creating compelling and persuasive ads, you can increase the likelihood of conversions and reduce your CPA. It is important to test different ad variations and monitor their performance to identify the most effective ads for your target audience.

Measure your creative optimization efforts with Singular’s Creative Analytics tool.

Step 4: Monitoring and adjusting your campaigns

Monitoring and adjusting your campaigns is the final step in implementing CPA strategies. This involves tracking and analyzing the performance of your campaigns, including metrics like conversions, CPA, customer acquisition cost, and return on investment (ROI).

By monitoring the performance of your campaigns, you can identify any areas where improvements can be made and make necessary adjustments. This can include optimizing ad spend, targeting different audience segments, or changing ad creative to improve conversions and reduce CPA.

Here, mobile attribution analytics is what you need.

Understanding Cost Per Acquisition in mobile marketing is crucial for optimizing ad spend and targeting strategies. 

By calculating CPA and implementing best practices like targeting the right audience and creating compelling ads, you can achieve lower acquisition costs and improve campaign performance. To excel in mobile marketing, monitor and adjust your campaigns regularly, focusing on high-converting channels and ads. Singular.net demonstrates effective CPA utilization in mobile attribution, emphasizing the role of CPA in measuring app performance. Stay informed about what constitutes a good CPA, compare CPA with other metrics, and reassess your CPA strategies periodically for sustained success in mobile marketing.

What Is Considered a Good CPA in Mobile Marketing?

A good cost per acquisition in mobile marketing can vary depending on the industry, target audience, and specific marketing campaigns. There is no universal benchmark for a good CPA, but generally, a lower CPA is considered better.

How Does CPA Compare to Other Marketing Metrics?

Cost per acquisition is a marketing metric that measures the cost incurred to acquire a new customer. It is different from other marketing metrics like cost per click (CPC), cost per conversion (CPC), or cost per lead (CPL), which focus on specific actions or interactions.

Can CPA Be Used for All Types of Mobile Marketing?

Cost per acquisition can be used for all types of mobile marketing, including various channels like social media, content marketing, email marketing, and search engine optimization (SEO). By tracking and analyzing CPA for each specific channel or campaign, mobile marketers can optimize their marketing efforts and reduce their customer acquisition cost (CAC).

How Often Should I Reevaluate My CPA Strategies?

It is recommended to reevaluate your cost per acquisition strategies on a regular basis, depending on the performance of your marketing campaigns and the changing dynamics of your target audience. This can be done by monitoring the performance of your campaigns, analyzing key metrics like conversions and CPA, and making necessary adjustments to optimize your marketing efforts.