What is Cost per Action (CPA)?
Cost per action, or CPA for short - sometimes also referred to as cost per acquisition - is the key figure of a cost model. This metric measures how much a company pays to achieve the conversion of a potential customer. Generally, your CPA is higher than your cost per click - CPC for short - because not everyone who clicks on your ad will take your desired action. The action may be buying one of your products, or filling out a form.
Here, the cost per action takes into account the number of ad clicks you need before someone converts. In other words, an improvement in your Conversion Rate will ultimately lead to a reduction in your CPA. Your Google ad costs are made up of the CPC and CPA.
So, what determines your CPA? Like most things PPC, your CPA is directly dependent on your Quality Score. This is Google's most important metric based on the quality of your keywords, ads, and landing pages. In general, the higher your Quality Score, the lower your costs - because for every point your score is above the average Quality Score of 5, your CPA drops by about 16%.
A proven way to keep your required PPC budget as low as possible is to keep your Quality Score high and your CPA low. This allows you to buy more ad space online and optimize the number of your conversions.
How does the Quality Score affect the Cost per Action?
It is generally known that the Quality Score in Google Ads (formerly known as AdWords) affects your cost per click, but not everyone knows that Quality Score is just as important in determining your cost per conversion.
It's always true that the higher the Quality Score, the lower your Cost per Action! In other words, optimizing the Quality Score and optimizing the CPA are essentially the same thing.« Back to Glossary Index