Cost per action (CPA) marketing is a form of advertising in which the advertiser pays only when target audiences engage in a particular action, such as making a purchase. This is an example of performance-based advertising, and it occurs mostly online. For advertisers, it has significant benefits, and people who are seeking ad placements can experience varying degrees of success, depending on how many of their users pay attention to the ads and take the desired actions. Many firms offer CPA marketing along with other performance-based marketing tactics.
In this form of marketing, a user needs to interact with an advertisement and complete an action, such as signing up for a trial, buying a product or filling out an information form. Unlike cost-per-click advertising, in which advertisers pay every time someone clicks an ad, CPA marketing offers payment only when a specific action occurs. The advertiser can determine what it defines as an “action” and will write this into the contract so that the organization placing the ad knows when it will be paid.
The benefit for advertisers is that they need to pay only when they get something. This might be a solid contact that could turn into a sale in the future, or it might be an actual sale. CPA marketing is often used in affiliate marketing, in which visitors to a site are encouraged to buy products through an affiliate link. When they make purchases, either a percentage of the sales or a flat fee goes to the affiliate as a reward for driving traffic toward the advertiser.
For ad placement, CPA marketing can have some disadvantages. Advertisers do not pay simply to display the ad, and if the users of a site are unlikely to interact with ads, the site owner might not receive a lot of ad revenue. The contract usually limits behaviors such as fake sign-ups or language that obliges site users to complete the action to access part of a site, because the company that is advertising wants to make valid contacts and does not want to pay for actions that might be coerced or fake.
Advertisers might be choosy about where they undertake CPA marketing, because they want to get the most for their money. They need to make sure that the tone of a website fits the advertising they want to run and that their ads will be relevant to the users of the website. They also usually want evidence of a minimum number of impressions every month. The more traffic the site receives, the more likely users will be to click on the ads.
