Cost per acquisition (CPA) is the average amount you spend on advertising to get one conversion, such as a purchase or a booking: ad spend divided by conversions.
Worked1,20,000 ÷ 400 = 300
A D2C skincare brand spends 1,20,000 on Google Ads in a month and gets 400 orders from those ads. Its CPA is 300 per order. If the average order brings 900 in margin, the campaign is profitable.
CPA turns ad spend into a number you can judge against profit. If a sale earns you 900 in margin and costs 300 to win through ads, you can scale with confidence. If it costs 1,200, you are paying to lose money, however good the clicks look.
In Google Ads the same idea appears as cost per conversion, and bidding strategies such as target CPA aim to hold it near a figure you set. Meta reports a similar cost per result. The platform will optimise for whatever you tell it counts as a conversion, so the definition matters more than the setting.
They are close cousins and often confused. CPA usually means what advertising costs per conversion in one campaign. Customer acquisition cost counts all sales and marketing cost per new paying customer. A conversion can also be a lead or a free trial, which is not yet a customer.