What is Cost Per Action (CPA) and Why it is Vital for Digital Marketing

Cost per action (CPA), also known as pay per action, is an online advertising pricing model where the advertiser pays for a specific action completed by the consumer. This action can be a form submission, download, sign up, sale, or any other conversion defined by the advertiser.

CPA is a highly effective model for digital marketers because you only pay when your campaign objective is achieved. It aligns incentives between the advertiser and publisher leading to higher engagement.

In this comprehensive guide, we will cover everything you need to know about CPA marketing, including:

What is CPA and How Does it Work?

With CPA campaigns, advertisers do not pay for impressions or clicks Instead, you only pay when a user completes a predefined action, such as

• Filling out a lead form
• Signing up for a free trial
• Making a purchase
• Downloading software
• Calling a phone number

The publisher receives an agreed upon commission for each of these completed actions.

For example, an advertiser may pay $50 every time someone signs up for a free trial of their SaaS app through a CPA link. So if 100 people sign up through the publisher’s website in a month, they would earn $5,000.

Unlike CPC or CPM campaigns, the publisher’s earnings potential is uncapped with CPA. If they can drive high volumes of conversions, they can maximize their revenues.

This pay-for-performance model aligns incentives for both parties. The advertiser only pays when their marketing objective is achieved, while the publisher is motivated to drive more conversions to earn higher payouts.

The Main Benefits of CPA Marketing

There are several key advantages that make CPA an effective monetization model:

Performance-based

With CPA, advertisers pay purely for measurable results and conversions. You are not paying for worthless clicks or impressions that do not further your goals. This optimizes your marketing ROI.

Transparent pricing

CPA rates are agreed upfront between advertisers and publishers. There are no hidden fees or surprises down the line. You know exactly how much each conversion costs.

Highly targeted

Because publishers only earn when users complete an action, they are motivated to target their traffic to increase conversion rates. This results in higher quality customers for advertisers.

Scalable revenues

Publishers have no cap on their potential earnings with CPA. The more conversions they drive, the more money they make. This incentivizes driving high volumes of relevant traffic.

Fraud minimization

Since advertisers are not paying for clicks or impressions, fraudulent activities like click spam have minimal impact. The focus is purely on generating actual conversions.

When Should You Use CPA Marketing?

CPA marketing is ideal for these scenarios:

• Lead generation – Paying a set fee for each email lead or sales inquiry can be more cost effective than broader awareness advertising.

• Free trials – Offering a financial reward for each new free trial signup helps minimize trial costs.

• App installs – You only pay publishers when they drive new app downloads, optimizing your user acquisition costs.

• Sales – Paying a percentage commission on each sale incentivizes publishers to maximize conversion rates.

• Call tracking – You pay per call driven to your phone number, ensuring you only invest in qualified leads.

Essentially, CPA is most effective for goal-driven marketing activities with a clear ROI. Paying only for measurable conversions gives you greater accountability.

Examples of CPA Offers

Here are some common types of CPA offers you may see as an advertiser or publisher:

• Lead generation – $10 for an email lead, $25 for a lead form submission

• Free trial – $15 for each new app trial signup, $50 per software free trial

• App install – $1 for each mobile app download

• Sale – 5% commission on each online product purchase

• Phone call – $4 per call driven to a toll-free number

• Email signup – $0.10 for collecting each email address

• Content download – $2 each time a content asset like an ebook is downloaded

The payout amount is determined by the perceived value of the conversion to the advertiser. Higher value actions demand higher CPA rates.

Main Components of a CPA Campaign

To implement an effective CPA program, you need to define these key elements:

1. Action/objective

Clearly identify the action the advertiser will pay for. This is the campaign goal or conversion, like a signup, download, or purchase. Define the requirements to count as a conversion.

2. Payout rate

Determine the fixed rate the advertiser will pay for each completed action. Popular methods include cost per lead, cost per acquisition, or revenue sharing. Set a rate that provides value for publishers while being cost-effective for your budgets.

3. Tracking method

Reliable tracking ensures publishers get credited for conversions. This usually involves embedding a tracking pixel or cookie on the offer landing page. Integrate with analytics to monitor performance.

4. Offer creation

Create a compelling offer to promote, like a content upgrade or special discount. The more appealing an offer, the higher potential conversion rates.

5. Promotion

Work with publishers, affiliate networks, social media influencers, and paid channels to distribute your CPA offer and drive conversions.

Optimization of these elements creates a profitable CPA program. Continually test new offers, payouts, and promotion strategies to improve results.

Pros and Cons of CPA Marketing

Let’s examine some of the key advantages and potential downsides of CPA advertising:

Pros

• Only pay for real conversions, not vanity metrics like clicks or impressions
• Publishers are incentivized to generate high quality leads and buyers
• No upper limit on publisher earnings potential
• Built-in fraud protection – fake conversions won’t be paid for
• Can optimize spending based on conversion value
• Achieve marketing goals like leads and sales, not just awareness

Cons

• Lower control over where/how offers are promoted
• Fixed payouts may be higher cost than flexible CPC or CPM
• Delayed compensation as payments are conversion-driven
• Limited brand-building as mainly conversion focused
• Requires closely monitoring publisher activities to avoid abuse

Finding the Right CPA Network

A CPA network acts as an intermediary between advertisers and publishers. They provide the tracking, reporting, and payments infrastructure to facilitate CPA advertising.

Here are some top CPA networks to consider joining:

• MaxBounty – Claims to approve CPA offers faster than any other network. Offers weekly payments.

• Rakuten Advertising – Established CPA network with expansive publisher reach.

• ClickDealer – Global performance marketing platform covering 180+ countries.

• CrakRevenue – Specialized in gaming, dating, and entertainment offers.

• Admitad – Leading CPA network in India and other Asian markets.

• DMA Institute – Comprehensive training programs on affiliate marketing and CPA.

• Scaleo – Full-stack CPA affiliate platform with granular tracking and optimization.

When evaluating a network, check their reputation, offered services, tracking capabilities, payment frequency/threshold, and publisher reach.

CPA vs Affiliate Marketing

CPA is a form of affiliate marketing because it involves advertisers (merchants) paying publishers (affiliates) for generating conversions. However, there are some distinctions:

• CPA – Advertiser pays a fixed amount for each action. Earnings are uncapped for publishers.

• Affiliate – Publisher earns variable commission based on a percentage of sales or profit share.

• CPA – Actions can be non-sales related, like lead generations or downloads.

• Affiliate – Commission is usually only earned on direct sales.

• **CPA **- Offer terms are predefined. Publishers must accept fixed payouts.

• Affiliate – Publishers can negotiate customized commission structures.

While there is overlap, CPA represents performance-based affiliate marketing focused on goals beyond just sales. CPA networks facilitate connecting advertisers and publishers efficiently.

Top CPA Affiliate Strategies

As a CPA publisher, here are some proven tactics to maximize your earnings:

• Target high-intent traffic – Getting your CPA offer in front of people already looking for that product/service boosts conversions.

• Create dedicated landing pages – Send your traffic to tailored landing pages that match the offer and incentivize conversions.

• A/B test everything – Try different headlines, copy, designs, incentives, and creatives to see what lifts conversion rates.

• Build your email list – Email marketing to past converters gives you recurring revenue opportunities.

• Retarget visitors – Remarket to site visitors who did not initially convert to capture