CPA is a model of payment for advertising or internet promotion services, in which the customer pays only for targeted actions committed by attracted visitors.
This abbreviation stands for Cost per Action, which literally translates into the actions and their corresponding payments. Targeted actions mean conversions, such as ordering a service, paying for a product, visiting a specific page, filling out a form, ordering a call back, adding a product to the “Basket”, etc. Each customer determines for himself what actions to pay for. Conversion tracking is carried out using metrics counters and web analytics systems connected to the site: Yandex.Metrics, Google Analytics, LiveInternet, etc.
Benefits of CPA
The CPA model has several advantages.
The site owner is confident in receiving returns from the funds invested in the promotion. He pays not impressions and not clicks, but only targeted actions.
The customer knows exactly how much money he will spend and what kind of return he will receive. This allows you to more accurately predict revenues and plan expenses.
The contractor is interested in attracting the maximum possible conversion traffic. The more targeted actions will be committed on the site, the more money he will earn.
CPA payment is the most transparent and winning model for both parties. One receives guaranteed leads, while the other has no restrictions on earnings, which depends only on their efforts.
Who CPA is suitable for
This payment method is suitable:
For online shopping and web projects whose main goal is sales;
For internet marketing companies (SEO, context, SMM). The CPA model allows them to attract more customers.
Affiliate Programs (PP) and CPA Networks
An affiliate program implies the payment of a certain percentage of transactions completed by attracted customers. Affiliate conditions can be different: percentage of sales, fixed cost of sales, fixed price for registration or other targeted action.
Each company independently determines the conditions of its affiliate program. The popular online store Aliexpress pays from 2 to 69% (depending on the product) to its partners. For attracted participants to be fixed for a particular partner, referral links containing a unique identifier are used.
CPA networks are sites (sites) where offers are placed — affiliate programs of various companies. These are the so-called exchanges where participants find each other. At the same time, the network itself acts as a guarantor of the fulfillment of the terms of the software by the contractor and the payment of remuneration by the customer.
CPA calculation
CPA is usually calculated automatically by the web analytics system. If there are no metrics connected or if users needs to find the cost of lead in a specific context (for example, for one category of goods or for a certain period), it is enough to use a simple formula.
How to calculate CPA:
CPA = Advertising Costs / Leads
For example, a company spent 25,000 dollars promoting its product. As a result, the advertising campaign attracted 56 orders. After simple calculations, we get CPA — 446.2 dollars. So much was spent on attracting one lead.
By knowing the ins and outs of CPA, merchants and other market participants can determine the effectiveness of the used promotion channels, tools, and performer. If each client brings less profit than is spent on its attraction, such a promotion is unprofitable.
