CPA (Cost per Action):

CPA goes one step further than CPC (Cost per Click) or PPC (Pay per Click). In a CPC/PPC campaign the advertiser has to pay whenever a user clicks on his ad and is directed to his website . Whether this user stays on the website for some time, buys something, submits his email address in an opt-in form or leaves right away without having taken any action has no effect on the CPC.

In CPA campaigns the advertiser is only charged when the visitor performs a specific action. This can mean as little as submitting his ZIP code or as much as filling out a whole credit application form with all required personal data or purchasing a product. Therefore CPA advertising is also called performance based advertising.

Correspondingly the cost for the action can vary from $1 or less to $50 – 100.

In a CPA campaign there is an advertiser who provides the offer, for example a credit card company who offers to pay $50 for each fully completed credit card application form. Then there is a publisher who agrees to take care of the promotion to drive traffic to the advertisers application form page. For every referred user who fills out the form the publisher receives the $50.

Obviously running a CPA campaign is very similar to running an affiliate program. The only difference is that in case of an affiliate the “action” he gets paid for is a sale whereas for a CPA publisher – depending on the nature of the campaign – the desired action might only be that a user submits some of his personal data.

For a publisher the way of choice to drive traffic to the CPA offer is PPC advertisement. To optimize a site to rank high in the organic search results is possible but can take several months and many CPA offers run only for a limited time. So when the site had finally made it to a decent position in the SERPs the offer it promoted could have been pulled off already. A CPA offer could also be promoted by email but many advertisers do not allow this for fear of being pulled into spam-troubles by their publishers.

A profitable PPC campaign would then mean that the publisher makes more money from his CPA commissions than he spends for advertisements. This sounds easy, especially considering that there are CPA offers that pay up to $100. But these are in very competitive markets where also PPC costs are in the range of several dollars.

Hence a lot of money can be made in the CPA business but only with sufficient know-how on how to pick profitable offers and how to create a highly converting PPC campaign. For more information see under CPA Network.

[Cost is from Latin constare = to be fixed, to cost;

Action is from Latin actionem – agere = to do]

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