What Is Cost Per Action (CPA) Advertising and How It Works?


Cost Per Action (CPA) some time also known as Pay Per Action (PPA); is an online advertising pricing model, where the advertiser pays for each specified action – this could include (but not limited too): an impression, click, form submit (e.g. contact request, newsletter sign up, registration etc.), double opt-in or sale.

The actions defined in a cost-per-action agreement relate directly to some type of conversion, with sales and registrations among the most common. This does not include deals based solely on solely clicks, which are referred to specifically as cost-per-click or CPC.

The cost-per-action (CPA) model is at the other end of the spectrum from the cost-per-impressions model (CPM), with the cost-per-click (CPC) model somewhere in the middle. In a CPA model, the publisher is taking most of the advertising risk, as their commissions are dependent on good conversion rates from the advertiser’s creative units and Web site.

Marketers looking for cost-per-action deals have several options. Publishers with considerable excess inventory may be willing to consider nonstandard offers. Sites specializing in incentive programs are in a position to offer CPA pricing on various types of leads, although the usual caveats concerning incentivized traffic still apply. Perhaps the most widespread use of performance-based pricing is affiliate marketing, whereby merchants/advertisers determine what actions they want to reward and how much they are willing to pay.

Cost Per Action (CPA) Advertising:

Of the many forms of advertising on the internet today, CPA or Cost Per Action is a very popular advertising option. CPA is also called Pay Per Action, and is basically an online advertising pricing model where you are paid for specified actions that are linked to your advertisement. These actions can be anything like a purchase, submission of a form, and so on. To many, CPA is a great way of buying online advertising as you have to pay the advertiser for the ad only on the occurrence of the desired action, and not before it. It is up to the advertiser to decide on the desired action, which can be a purchase, filling of a form, etc.

Types of Cost Per Action advertising: There are several different types of cost per action advertising, which vary depending on the action taken:

In addition to the action of making a purchase, an action may also consist of filling out a form or downloading something.
Sometimes the action is simply signing up for a newsletter.

Cost Per Lead, another form of cost-per-action is a way for advertisers to get prospective customers. It usually involves the consumer signing up for something, like further information. Information about a lead may be just email information or may include a multi-page form requiring the user to complete additional demographic information.

How CPA Advertising Works:

There are three popular options for CPA advertising, which are pay per click, pay per lead and pay per sale. As an affiliate, you may install a pay per click advertisement in your website where you need people to click on your add. Unlike magazines, there is no need of your paying for just placing this ad on your website. You have to pay only if someone clicks on the advertisement, to affect the click through rate or CTR. This proves to be beneficial to you as you need not pay for advertisements that don’t work. So if no one clicks on the ad, you need not pay anything. This form of advertising stays for as long as you like, which is unlike magazine ads that run for an issue. This leads to an improved and better recognition of your business.