Cost Per Action marketing (commonly referred to as CPA, although sometimes seen as PPA – pay per action) is not properly understood by most people. We are basically talking about something that seems really simple: advertising that sees the marketer pay only when an action is taken. The actions that are covered are diverse like buying a product, subscribing to a service or subscribing to a newsletter.
CPA Advertising Types
We have various advertising options that are available, based on taken action:
- Purchasing something
- Filling a form
- Downloading something
- Signing up for newsletters
- Using a specific online coupon code
Keep in mind that we also have CPL, which means Cost Per Lead. This is another option available for advertisers to obtain prospective customers, not actual customers. In this situation we are usually faced with signing up for a newsletter or an account, maybe wanting to obtain more information about a subject.
For Marketers – Calculating CPA Campaign Effectiveness
You just have to take costs and divide by how many acquisitions are done in order to calculate the actual cost per action. In order to calculate effectiveness, things become more complicated. You basically need to compare your campaign with others. You usually want to compare CPA with CPC, CPI and similar opportunities.
The marketers do appreciate using CPA because of the fact that in most cases money will be paid only in the event that a specific action is taken. For instance, let us say that the value of a product is $35. If the campaign convinces a client to make the purchase and the cost to make that sale is $20, you basically have a profit of $15. This is especially great when referring to strictly online products since there are not many costs associated with offering them. With a physical product like a pair of jeans, CPA may not be a great option since you also have extra costs associated with manufacture, storage and transportation.
For Publishers – Using CPA To Make Money
As you can easily imagine, this is a topic that is quite large. I will try to cover it in future articles. As a publisher, the most important question to ask yourself is:
Will I make more money with CPA or Affiliate Marketing?
The situations in which you make more through PPC options like Google AdSense are quite rare. Since you are surely interested in making as much as possible on your own, I can say that CPA is definitely something you want to take into account but:
CPA is not always the best monetization option
Everything depends on the offer that you are promoting. As an example, if you find a deal that offers you $15 when someone buys a $3 monthly membership for one year, it is something that you want to promote as opposed to getting 15% on an equal value $36 sale.
For Publishers – Taking Marketing Costs Into Account
This is where things get a little complicated. In order to decide if a CPA offer should be used, you have to also think about how much you have to invest to get results. You cannot just think about how much you make with the deal. If in the above mentioned example you would need to spend $10 to get a $15 profit, this may not be so profitable since with those $10 you might bring in more when you can get enough traffic to bring in more than $15 profit.
Thinking about marketing costs is not that important when you use SEO to promote a site since in that case you are investing in your entire site and you do not only promote a couple of CPA deals (well, you should not). However, if you use paid traffic like Facebook Ads or Google AdWords, this becomes vital for your success.
Always perform small tests when you market a CPA offer through paid traffic. You have to be sure that you do not lose money, which is much more common than you may think. At the same time, I do recommend that you do not use paid traffic when your profit is really low. If you use $100 to make a $10 profit, you would need a huge advertising budget in order to make a comfortable monthly profit.
Cost Per Action marketing is definitely complex. You have to carefully see what works and what does not work. Some promote offers through YouTube while others just use SEO. Think about what you are good at and see if there are some CPA deals that are good for you.
You will want to check out Offer Vault since there are literally thousands of available CPA offers there. See if there is something that you can use and focus on the Networks that give access to many opportunities. I personally use CPA Grip and CPA Lead due to the niches that I promote but there are also some single deals that are great.