Cost per acquisition (CPA) is the average amount you spend on advertising to generate one conversion, typically a completed purchase. It answers the question: how much does it cost to acquire one customer through this channel?
Formula
CPA = Total ad spend / Number of conversions
For example: £500 spent to generate 25 orders gives a CPA of £20.
Worked example
Your Google Shopping campaign spends £1,200 in a month and drives 60 completed orders.
CPA = £1,200 / 60 = £20 per order
Whether £20 is acceptable depends on your average order value and margin. If your AOV is £40 and your gross margin is 60%, your profit per order before acquiring is £24, so a £20 CPA leaves £4 margin. That is tight.
How Vendably calculates it
Vendably computes CPA for your ad campaigns from platform-reported cost and conversions, and stores it on each performance snapshot. CPA is shown in your Ads performance views and can be used in automation rules. The calculation is cost divided by conversions, applied at campaign level across your connected ad platforms.
What good looks like
There is no universal CPA target. The only CPA that is sustainable is one that leaves a profit after all costs are accounted for:
- The margin test: (AOV x gross margin percentage) minus CPA must be positive. If that result is negative, each order is losing money regardless of how your ROAS looks.
- Using the worked example above: AOV £40, margin 60%, gross profit per order £24. A £20 CPA leaves £4. A £25 CPA loses £1 per order. The acceptable CPA ceiling is £24, and in practice you want headroom below that to cover returns, overheads, and margin on future orders.
- If CPA is rising, investigate whether CTR has fallen (higher cost to get the same clicks) or conversion rate has dropped (more clicks needed per sale).
Because CPA is expressed in absolute cost rather than as a ratio, it is directly comparable across campaigns in a way that ROAS is not. A campaign with a £15 CPA and a £50 AOV at 50% margin is more profitable per order than a campaign with a 4x ROAS but a £10 AOV at 20% margin.
How to improve it
Lower the cost side
- Reduce CPC through better feed quality, higher ad relevance, and smarter bidding. A lower CPC means you spend less to get the same number of clicks.
- Add negative keywords to stop spending on searches that attract clicks but no conversions. Wasted clicks inflate CPA without contributing acquisitions.
- Refine audience and product targeting. Budget concentrated on your highest-converting products naturally lowers overall CPA.
- Pause campaigns or product groups that have accumulated spend without conversions. Continuing to run underperformers raises average CPA across your account.
Raise the conversion side
- A higher conversion rate means more acquisitions from the same number of clicks, which directly reduces CPA. Improving product page quality, trust signals, and checkout speed all lift conversion rate.
- Better product images and descriptions that match search intent reduce bounce rate from the landing page.
Use Target CPA bidding carefully
- Google's Target CPA bidding strategy optimises bids to hit a goal CPA. Set it at a level that is achievable given your historical data, and give the algorithm enough conversion volume (at least 30-50 conversions per month per campaign) to learn effectively. Targets set too aggressively cause the system to restrict spend and miss impression opportunities.
Pair CPA with AOV, ROAS, and conversion rate to see the complete economics of acquisition. CPA tells you what you paid; AOV tells you what you got.