22. What is CPA ?
Cost Per Action or CPA (sometimes known as Pay Per Action or PPA) is an established online advertising pricing model, where the advertiser pays for each specified action taken by a user which is linked to an advertisement. Actions can be a purchase, a form submission, a download, referrals and so on. In some cases, CPA's have also been used for affiliate marketing or sales driven marketing campaigns where the terminology changes to Cost Per Acquisition. In this case the advertiser/marketer/seller pays the publisher or campaign manager, when a customer is acquired by process of a sales transaction.
For advertisers whose business model call for direct response, CPA is the ideal way to buy online advertising and pretty much a standard. An advertiser only pays for the ad when the desired action has occurred as determined by the advertiser. Radio Stations and TV channels also sometimes offer unsold inventory on a cost per action basis. The biggest challenge in the CPA model for both the advertiser and the Internet Marketing Agency is the pricing. CPA is impacted by multiple factors, depending upon the category of online advertising inventory being purchased.
CPA as "Cost Per Acquisition"
As I mentioned earlier, CPA is sometimes also referred to as "Cost Per Acquisition", which reflects the fact that most CPA led marketing campaigns are about acquiring new customers by making sales. In such cases, the term "Cost Per Acquisition" instead of "Cost Per Action" becomes a correct interchange. But not all "Cost Per Action" offers can be referred to as "Cost Per Acquisition".
While at it, we thought it would help state an important difference between CPA and CPL advertising for you to understand and take an informed decision.
In CPL campaigns, advertisers pay for each interested prospect which for the sales team is a lead to be acted upon (hence, Cost Per Lead). Typically the contact information of a person interested in the advertiser's product or service is solicited and shared with the advertiser. CPL campaigns are more suitable for brand marketing and campaigns which involve engaging consumers at multiple touch points.
In CPA campaigns, the advertiser typically pays for a completed action and in the case where the action is acquisition, the advertiser pays when a sale is concluded typically involving a credit card transaction.