CPA stands for Cost Per Acquisition. In Google Ads, CPA represents the average cost you pay to generate one meaningful action, known as a conversion. In lead generation campaigns, this is typically a completed form, a qualified phone call, or a booking request.
CPA shifts the focus from clicks to outcomes. Instead of measuring how many people clicked your ad, CPA tells you how much you are paying for actual business opportunities.
Example:
If you spend £1,000 on Google Ads and receive 40 form submissions, your CPA is £25. This means every lead costs you £25 to acquire.
How to Calculate and Find CPA in Google Ads
CPA is calculated by dividing your total ad spend by the number of conversions generated.
The formula is simple:
CPA = Total ad spend ÷ Total conversions
Example:
You spend £750 and generate 30 leads.
£750 ÷ 30 = £25 CPA.
In Google Ads, CPA appears as “Cost / conv.” You can view it in the Campaigns dashboard by adding this column. CPA can be analyzed at campaign, ad group, keyword, search term, device, location, and time-of-day levels to identify where performance is strong or weak.
What Is Target CPA in Google Ads and How Does It Work?
Target CPA is an automated bidding strategy in Google Ads that allows you to tell Google how much you are willing to pay, on average, for a conversion. Instead of setting manual bids, Google uses machine learning to adjust bids in real time across auctions.
Google analyses signals such as search intent, device, location, time of day, and user behaviour. It bids higher for users more likely to convert and lower for users less likely to convert. The goal is to achieve your target CPA across all conversions, not on every individual one.
Example:
If you set a Target CPA of £30, some leads may cost £20 and others £40, but Google aims to keep the average close to £30 over time.
How to Calculate and Determine the Right Target CPA
Target CPA should be based on business economics, not guesswork. To calculate it, you need to understand the value of a customer and your conversion rate from lead to sale.
Example:
A customer generates £1,200 in profit.
One out of four leads becomes a customer.
Maximum allowable CPA = £1,200 ÷ 4 = £300.
To remain profitable, your Target CPA should be set below £300, for example £200–£250, allowing room for variability and growth.
What Is a Good CPA or Target CPA for Google Ads?
A good CPA or Target CPA is one that allows your campaigns to generate consistent profit. There is no universal benchmark because CPA depends on industry, margins, and conversion rates.
A CPA of £20 may be excellent for a local service business but unworkable for a high ticket B2B service. The correct measure of “good” is whether your cost per lead or sale aligns with your profit goals.
How to Set or Change Target CPA in Google Ads
Target CPA is set at the campaign level by selecting Target CPA as your bidding strategy. Once applied, Google immediately begins adjusting bids automatically.
When changing Target CPA, adjustments should be gradual. Large or frequent changes can disrupt Google’s learning process and cause unstable performance.
Best practice example:
If your current CPA is £40, reduce your Target CPA to £36 instead of £25, then allow one to two weeks for the campaign to stabilize.
How to Measure and Reduce CPA in Google Ads
Measuring CPA accurately requires proper conversion tracking. Only high-intent actions such as form submissions and qualified calls should be counted as conversions.
Reducing CPA is achieved by improving traffic quality and conversion efficiency. This includes excluding irrelevant search terms, focusing on high-intent keywords, improving ad relevance, and optimizing landing pages.
Example:
If your landing page conversion rate improves from 5% to 10%, your CPA is effectively reduced by 50% without increasing ad spend.
How to Lower CPA in Google Ads Long Term
Long-term CPA reduction comes from continuous optimisation rather than bid cuts. Segmenting performance by device, location, and time of day allows budget to be shifted toward high-performing areas.
As conversion data increases, automated bidding strategies like Target CPA become more effective, helping stabilize costs and improve lead quality over time.
Final Summary: CPA vs Target CPA in Google Ads
CPA tells you what you are currently paying for conversions. Target CPA tells Google what you want to pay on average going forward.
CPA is a measurement. Target CPA is a control mechanism. When both are aligned with real business value, Google Ads campaigns become scalable, predictable, and profitable.
