The cost per action is a crucial KPI to track. Here's all the information you need about this KPI, what it is, why it's important, how to calculate it, and way more!
Cost per action is an online advertising measurement and pricing model referring to a specific action, for example, a sale, click, or form submit. Usually people will refer to the action as a conversion (conversion into trial, conversion into client, conversion into lead). The main advantage of the CPA model is that advertisers only pay for the results, not just a click on your landing page or impressions.
The average cost per action (CPA) is calculated by dividing the total cost of conversions into actions by the total number of conversions into actions. For example, if you take a pay per click marketing campaign, and that your ad received 3 conversions into clients, one costing $2.00 and one costing $4.00, your average CPA for those conversions is $2.00.
The average cost per action will of course change depending on your payment model and industry. However AdWords clients can see an average CPA of $59.18 on the search network and $60.76 on display the display network. The most effective cost (or better return on investment) you can have, the better, but keep in mind your own industry benchmarks.
Just like any other costs, you want to keep them as low as possible without compromising on the quality of the leads you get. However, if you need to pay more for a desired action than what this specified action will bring you in terms of benefits or payments, it’s probably a bad CPA.
Your cost per action advertising campaigns can be tracked in multiple different reports very easily with other relevant KPIs such as cost per mille (CPM), link clicks, number of actions, and more.
Executive report template
This template is filled with business metrics your C-suite will want to see. Show them your revenue, new customers, online advertising results, lead generation, and more. Use this data to optimize your campaigns and generate better decisions like getting higher results with lower costs.
PPC report template
Get the best out of your ad campaign. From social media to AdWords (or Google Ads,) measure your ad results with this awesome digital marketing report which helps you track important metrics. You can even use it for campaign optimizations and a/b testings.
Ecommerce report template
A report with all the most important metrics for your eCommerce business site. Measure your conversion rate, the average cost of acquisition, the total number of sales, cost per click, average order value (AOV), revenue, all from your marketing channels.
In order to improve your cost per action, here are some of the best tips you should keep in mind.
Optimize your ad campaigns' settings.
Make sure to optimize your current campaigns so that you have a lower cost of any number of actions. You can improve your ad titles, descriptions, landing pages, functionalities or CTAs, do some a/b testing and make sure to stop any campaigns that doesn’t perform as intended.
Track it alongside other metrics
Tracking your cost per action is great, but it's also important to track it alongside other metrics like landing page performance, total cost, link clicks, customer acquisition cost, Lifetime value of a customer, conversion rate, etc. This will help you get a more accurate picture of your efforts and the revenue they're generating. Use a tool like Dashthis to create a monthly report to track those important metrics.
Retarget users who abandoned the shopping cart
If you’re running an ecommerce business, you know who left your site without buying what’s in their cart. These people are clearly interested in your product, they almost completed the desired action you wanted. Retargeting them will help you close more sales and have an overall better return on investment for a quite cheap price per action.
Although cost per action is regularly used, there are multiple synonyms that can be used. Here are a few:
Cost per conversion, Cost per acquisition (CPA), Cost per customer, Cost per click (CPC), Cost per client, Cost per new client, Cost per new customer, Cost of customer acquisition (COCA)
