What Cost Per Online Acquisition is: what it costs you (in dollars) to get each sale or acquisition on your site, which is– in the case of online acquisitions– usually the cost of your online Pay-Per-Click advertising.
What Cost Per Online Acquisition is not: the total campaign cost. You’ll need an idea of the total campaign cost in order to calculate your cost per acquisition, though. Basically, you’ll be dividing the total campaign cost by your number of acquisitions in order to find your cost per online acquisition. In order to do this, you’ll also need to know, without a doubt, which acquisitions definitely came from your Pay-Per-Click campaign.
Why we care about Cost Per Online Acquisition: Best practices say that you shouldn’t spend more than 15% of your customer’s lifetime value on your acquisition. In order to track this benchmark, you’ll need to know your Cost Per Online Acquisition, in a solid dollar amount.
This post is part of an ongoing Clickipedia series, defining all the terms you need to know for conversion rate optimization. Keep checking back each week to learn more, and don’t forget to check out the whole series.