In one line
Spend ÷ conversions. CPA (Cost Per Action) is what one desired action cost you — a signup, a purchase.
Why it matters
Where CPI tells you the cost of getting an install, CPA tells you the cost of getting a real, valuable action. Most campaign optimization ultimately converges on lowering CPA.
Finding the cause when CPA is high
CPA is a downstream result. The upstream metrics — CPM, CTR, CVR — usually explain why: expensive impressions, weak clicks, or poor post-click conversion.
Splitting CPA into its parts
CPA is downstream of everything before it. Written out, CPA = CPM ÷ (CTR × CVR × 1,000).
Put in a $5 CPM, 1% CTR and 5% CVR and CPA comes to $10. Halve CTR to 0.5% and CPA doubles to $20 with nothing else changed. Double CVR from 5% to 10% instead and CPA falls to $5.
So when someone reports that CPA is up, the question is which of the three moved: a higher CPM points at the auction, a lower CTR at creative, a lower CVR at the landing page or offer.
Run the numbers
Your target CPA works backward from LTV and the margin you want to keep. Put your figures into the target CPA calculator to see whether today's CPA sits above or below that line.
Go deeper
Where to look first when CPA spikes is covered in Ad Performance Diagnosis.