CPA (cost per acquisition, or cost per action) is what you pay in advertising for each conversion — a purchase, signup, or lead: total spend divided by conversions. If €1,200 of ads produced 40 leads, CPA is €30. It ties spend directly to the outcome you actually wanted.
CPA is the metric that makes clicks honest. Traffic metrics flatter campaigns that attract the wrong visitors; CPA only credits what converts. That makes it the natural scoreboard for lead generation and fixed-value conversions, where ROAS's revenue-weighting adds nothing.
The ceiling comes from unit economics, not benchmarks. Work backwards: a customer worth €600 in gross profit, with leads closing at 20%, supports a lead CPA up to €120 at break-even — your target sits comfortably below, say €60–80, leaving margin for sales costs and misses. For subscription products, start from LTV: an LTV of €900 with a 3:1 LTV-to-CAC goal caps blended CPA at €300. Any CPA target not derived this way is a guess.
Target CPA bidding (Google, and cost-cap on Meta) turns the number into an instruction: the platform predicts each auction's conversion probability and bids high where likelihood is high. Requirements for it to work: trustworthy conversion tracking, a realistic target (within ~20% of your trailing actual — an aggressive target throttles delivery rather than producing cheap magic), and volume (it stabilizes much faster above ~30 conversions/month).
Two manipulation risks. Optimizing CPA on a soft conversion (page view, add-to-cart) produces beautifully cheap non-customers — optimize on the deepest event with enough volume. And CPA pressure pushes algorithms toward easy conversions: brand searches, retargeting pools, existing customers. Pair CPA with a new-customer lens before concluding a campaign "works".
B2B SaaS: demo request → customer at 25%, customer gross profit €2,400 → break-even demo CPA = €600; target set at €250. Campaign A: €5,000 → 28 demos = €179 CPA ✓. Campaign B: €5,000 → 11 demos = €455 CPA — paused despite a cheaper CPC than A.
From unit economics: customer profit × close rate = break-even CPA; target below it. For Target CPA bidding, also stay within ~20% of your recent actual CPA and adjust gradually — algorithms respond to attainable targets, not wishes.
CPA when conversions have similar value (leads, signups, single-product purchases). ROAS when order values vary widely and revenue-weighting matters (multi-SKU e-commerce). They're the same idea — cost vs outcome — weighted differently.