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Let’s look at the differences.
CAC is the total cost to acquire a customer, factoring in all expenses and touchpoints:
CAC is the big picture telling us if marketing initiatives are helping with business goals or just burning cash.
CPA, on the other hand, is limited to in-platform data.
Its name, cost-per-acquisition, sounds like it should be all-encompassing.
But since it’s built into every ad platform out there, and they all have severely limited visibility on overall costs, the term CPA has been rebranded by the platforms.
It has become synonymous with a limited, in-app view of acquisition costs.
It’s the total amount spent in an ad platform or campaign compared to customer acquisitions attributed to that platform/campaign.
It only tells you what Google or Meta says about their campaigns.
Attribution bias should be coming to mind here — every platform wants to look good and entice marketers to invest more of their advertising money.
Bottom line?
Because it’s so limited in scope, in-app CPA shouldn’t be used for big-picture analysis.
For that, you’ll need CAC.
Despite its limitations, we recommend you keep CPA in your marketing toolbox.
It’s useful for establishing benchmarks and comparing performance within a platform.
This is sometimes referred to as directionality or incrementality.
While CAC and CPA are different, they will likely trend in the same direction.
If your Meta CPA goes up, your CAC is going to go up too— unless Meta’s CPA increases were offset by a cost reduction elsewhere.
If you are tracking your optimizations properly, you should be able to reduce the CPA both at the cold and warm stages of the customer journey.
CPA is what Google or Meta tells you about how efficiently your ads are converting users into customers on that platform.
It’s useful when you want to compare campaign performance against other campaigns, or across time periods.
CPA tells you how much you’re spending to acquire a customer within a single platform, but it doesn’t factor in other costs like content creation, brand awareness on other platforms, and the multiple touchpoints along the customer journey.
Your CPA may look efficient, but when you add up all the other costs outside the platform, your true cost for obtaining a customer could be much higher.
Scaling a campaign with a good CPA could be losing money if other expenses aren’t considered.
On the other hand, a campaign with a high CPA may be what’s driving sales in another platform. Turning it off could stifle growth and overall company profitability.
While CPA can’t replace CAC, it’s still a useful metric for marketing leaders in specific ways.
By comparing CPA across campaigns, time periods, or audience segments, you can figure out which ads are performing better.
You can use this data to uncover effective marketing angles and as a guide for budget allocation.
If you’ve got a campaign with a low CPA, you can scale it up—but remember, it’s just one piece of the puzzle. To scale big-picture, you also need to look at CAC.
Make sure to take a snapshot of your in-platform CPA when the company is hitting its business goals.
Use that data as benchmarks to guide future optimizations.
With a better understanding of the customer journey, you can let essential campaigns run even if in-platform metrics aren’t showing immediate profitability.
Let’s say an e-commerce company is running campaigns on YouTube TV and Amazon ads:
Using the CPA formula:
At first glance, the data suggests the company should pull the $2,000 from YouTube TV and dump it into Amazon Ads—after all, the Amazon Ads CPA is far lower, right? Not so fast.
The YouTube TV campaign started running on April 2nd. You notice a correlating lift in Amazon sales.
This means YouTube TV may be driving brand awareness that’s influencing purchases on Amazon.
If you were to shift all your budget away from YouTube TV based solely on CPA, you’d be ignoring the broader picture of how these channels work together in the full customer acquisition journey.
This is where relying only on CPA can mislead you—it looks like Amazon Ads is crushing it, but in reality, YouTube TV is playing a critical role in generating those sales.
Shifting the $2,000 from YouTube TV not only would cut off the supply of product-aware people going to Amazon to buy, it would also be ineffective overspending on Amazon.
This example is extreme to make it easy to see the impact, but fine tuning your grasp on CPA and CAC is what will set you apart as the money-whisperer in your business.
CPA is a great metric for comparing campaign performance within a platform, but it’s not a replacement for CAC.
CPA can help you fine-tune your digital advertising efficiency, provide insight into campaign performance, and serve as benchmarks for data driven decision-making.
Just remember, for the big decisions—like scaling or understanding where to allocate your budget—you need CAC, which factors in every part of the acquisition journey.
Understanding the difference between CPA and CAC is what separates marketing leaders who make data-driven decisions that grow businesses from those who simply optimize within a platform.
