CPA is one of the three primary pricing models for Web-based monetization, along with cost per mille (CPM) and cost per click (CPC). Cost per action is generally the pricing model friendliest to advertisers or merchants, since they pay only when a certain action is completed (and thus don’t pay for ad impressions or clicks that don’t lead to the desired conversion).
CPA arrangements can compensate publishers via either a percentage-based commission (for example, getting 5% of all purchases completed by referrals) or a flat fee (for example, a $50 commission for every account opened by referrals).
Below is an example of an affiliate on the CJ Affiliate platform that gives referring sites a percentage of any sales generated:
Here’s an example with a different approach; this merchant gives a flat fee of $80 for every sale resulting from an affiliate’s site.
The CPA model is friendly to advertisers because they only pay when a specific action is taken. In most cases, that means that they will only make a payment to merchants after a profitable transaction is completed. In the example above, the $80 payment that Media Temple makes is a large outflow. But if they earn $200 in revenue for every sale, they are guaranteed to see a profit as the net result of any payment.
Similarly, the first merchant may have an average profit margin of 10% on their sales. Even after paying up to 7% to the referring affiliate, the profit margin would remain positive.
Put another way, publishers earn revenue at different points depending on the pricing model:
- CPM: Publishers earn revenue whenever an ad is shown.
- CPC: Publishers earn revenue when an ad is shown and a visitor clicks on that ad.
- CPA: Publishers earn revenue when an ad is shown, a visitor clicks the ad, and the visitor goes on to complete a specified action (such as make a purchase or open an account)
Though CPA arrangements are generally seen as advantageous to the advertiser, certain publishers may prefer this pricing model too. Specifically, if publishers are able to deliver a high number of clicks and the referrals convert at a high rate, they may be able to realize a very high effective RPM or average revenue per user.
CPA Promotion Methods
There are many different ways to promote CPA campaigns. The truth is that CPA marketing is really not all that different than other types of marketing.
Here are a few examples of the more popular CPA promotional methods that you may come across:
- Review Website: generally this type of website contains several products. They will compare each product and give a review of it.
- sales/landing page: this site is usually more of a direct sales page and likely contains specific detail about the product.
- Splash page: this usually contains light and will have flashy graphics with some punchy headline and copy to encourage readers to input their details or to click through to the merchant.
- Quiz/fun landing page: similar to the splash page but even simpler. There will usually be a question with two or more answers that can be clicked.
Monetizing via Affiliate Marketing
The CPA pricing model is used in almost all affiliate marketing campaigns, with merchants paying affiliates each time a specific action is completed.
Affiliate marketing can potentially be a profitable monetization strategy for some sites; it tends to work well when the topic of a site is extremely focused in a vertical where completed sales or transactions can be valuable. See our e-book Guide to Affiliate Marketing, part of our larger Web Monetization Handbook, to read more on this topic.
What is a CPA affiliate?
Cost per Action (CPA) marketing is an affiliate model where the commission is paid when a user takes a specific action.This can be many objectives from emails, to sales, and full form registrations.
How much is the commission in CPA marketing?
There are many people who are making millions with CPA marketing. In terms of single conversion, it could be low as $0.10 to $100’s. In some cases when the user has to enter credit card details for the trial of the product, you can get paid up to $50
What is the difference between CPC and CPA?
While CPA is where the advertisers pay out the publishers/marketers based on a specific action, CPC is where the payout is based on ad clicked.