What is CPA?

CPA by definition is ” Online advertising payment model in which payment is based solely on qualifying actions such as sales or registrations.” Basically you get paid every time someone submits their e-mail address and name or orders a product.

When you look for information on CPA you’ll see other things like CPC or cost-per-click and CPM or cost-per-impression. The difference should be easy to see in CPA or cost-per-action you only get paid if you traffic does the action whether it’s enter an e-mail or a name and phone number. The other two have more to do with PPC or Pay-per-click.

Alright that was a lot of information fast I know but to give you the gist if want to get into CPA marketing you need to be able to do PPC or to have website to put offers on. The funny thing about CPC and CPM is that they are the things you’re going to have to pay for if you do advertising through PPC. PPC is the probably the best way to do CPA marketing because you get people that are looking for something that your affiliate offer is going to do for them.

How to get started in CPA?

Well if you’re going to start doing CPA you need to join a good CPA network that has a wide selection of offers and is good about paying affiliates what they earn. Some of the best CPA networks and the ones I use are AzoogleAds, MaxBounty, Affiliateer and NeverBlue. The all offer good CPA offers that pay you good money on average about a $1.50 for each lead( some information is given). They aren’t too hard to join and they have good affiliate managers that are always willing to help you out.

Digital Media: Advertising Models By Pricing Method
(Abhishek Uppal)

Several pricing models have evolved to dominate the online advertising market. The biggest change over the last few years is the emergence of performance-based pricing, mainly composed of CPC pricing, due to the increasing popularity of paid search. CPM pricing has remained relatively stable in the 40%-50% range over the past few years and has actually seen resurgence over the last two years, driven by new interactive display ad formats, such as rich media and videos. Hybrid models have experienced the biggest areas of decline as advertisers move more toward a strict branding or strict performance pricing format. This is a positive trend as it reflects a trend of online spending, more closely mimicking offline media spending. Through the first half of 2006, 48% of advertising revenues were on a CPM basis, 47% on a performance basis (i.e., CPC/CPA), and 5% on a hybrid basis (i.e., has some display and performance features). This compares to 43%, 10%, and 47% in 2000.

CPM (Cost Per Thousand)
The CPM pricing model is commonly used for display and rich media advertising and is similar to the pricing model for offline media, where pricing is determined by broad audience exposure. For example, a $10 CPM means it costs $10 to show the banner on 1,000 page views. High-quality inventory can command a $20 plus CPM for a static banner ad and $40 plus CPM for a rich media/video ad. A run of network CPM would be in the $0.50-$3.00 range.

Cost Per Click (CPC)
The CPC pricing model, which is also commonly referred to as PPC (Pay-Per-Click), is a performance based advertising model that evolved from paid search. Within the CPC model, an ad may be viewed many times, but the advertiser only pays for the ad when someone actually clicks on it. As a result, the CPC model encourages publishers to display relevant ads that will illicit an actionable response from consumers. There are two types of CPC models:

Auction-Based CPC Model. An auction-based CPC model combines CPC with a dynamic pricing that is set by the advertisers, not the publisher. The advertiser bids on how much the keyword is worth. When a user searches for a particular term or phrase, the list of advertisers appears according to the order of bidding. Overture created the first auction-based CPC model and holds a patent on the broad model. Given that keyword search competition is based on an open marketplace, one could see how pricing on highly profitable terms could increase rapidly. Depending on the search engine, minimum bids on a search term may start at $0.01 and may be as high as $50 or more for high price products (such as private jets or malpractice lawsuits). The average CPC is still well below $1, likely in the $0.40-$0.60 range.

Hybrid CPC Model. The Hybrid CPC model combines bidding price with a number of other factors that are determined by the publisher, most notably the quality of the advertiser’s message and the resulting likelihood that users will click on the ad. In other words, a combination of the bid price and the relevancy of the ad to the search query determine the position of the ad. While Overture pioneered the basic auction CPC model, Google developed the Hybrid model and has enhanced it every year, generating significantly increased monetization, far beyond most estimates. As a result, the monetization gap between Google and Yahoo! has widened, promoting Yahoo! to develop its version of hybrid pricing, code-named Panama.

Pay-Per-Call (PPC)
Similar to CPC, the Pay-Per-Call model is a performance-based advertising model, whereby search engines and directories can charge advertisers on a per lead basis. In the PPC model, ads are rendered with the company name, address, description, and a trackable toll-free number that redirects the consumer to an advertiser’s actual phone number. Advertisers pay the PPC provider based on the actual calls made to the tollfree number. PPC represents an attractive opportunity as only 42% of the
20 million small and medium-sized businesses (SMB) in the United States have a website, and SMBs have demonstrated their willingness to pay for phone-based leads as evidenced by the approximate $16 billion in annual Yellow Page advertising spending. I expect PPC to become a natural extension of local search and to expand the search marketplace to include merchants who do not have websites or lack search marketing expertise. Pay-per-call has the opportunity to close the loop between online searches and offline buying.

Cost Per Action (CPA)
The CPA pricing model is a performance-based model commonly used by advertisers, whereby an advertiser only pays the publisher when a sale or lead or some other defined action is taken. The CPA model is attractive as a merchant only pays an affiliate when a specific result is achieved. Additionally, the merchant assumes little risk in their advertising as they set the price they are willing to pay for the action only. Virtually all direct marketing companies use some form of CPA marketing as a component of their online marketing mix. The two most common forms of CPA pricing are utilized in affiliate marketing as well as lead generation. Affiliate marketing is responsible for 10%-15% of all eCommerce revenues. Additionally, advertisers are increasingly turning to lead generation, given the fixed price nature and the ability for CPA agencies to generate significant numbers of leads for advertisers.

Forget clicks, page views, and impressions; the only way to effectively track your online marketing ROI is through Cost-per-Action (CPA) analysis.

As the online advertising market is poised to grow nearly $10 billion over the next six years, it’s essential that we remember the importance of measuring the effectiveness of that spending. There’s no point undertaking any marketing or advertising campaign unless you can measure its results. And results are best measured in terms of return on investment (ROI).

Unfortunately, in the world of marketing and advertising, many businesses seem to be losing touch with their general objectives. The tools may have changed, but the principles remain the same – Your advertising campaigns are only successful if they meet the objectives you set out to achieve. So if you’re after increased sales, you need to measure the cost of each sale generated to determine your return on investment.

Fortunately for advertisers, tracking ROI for online advertising is much easier than it is for traditional forms of advertising, such as TV, Radio, Newspaper, Magazine, and Billboard. When you market online, every advertising campaign can be tracked and measured all the way down to the penny. This is why more and more advertising dollars are being spent online every day.

Why Not Cost-Per-Click or Cost-Per-Impression?

When it comes to tracking campaign effectiveness, many businesses rely on Cost-per-Click (CPC) and Cost-per-Impression (CPM) statistics. But what many people forget is that for most businesses, clicks and impressions don’t earn you money. So by tracking clicks and impressions, you’re not really tracking return on investment. The same is true of page stats.

If you’re like most businesses, impressions, clicks, and page views are simply a means to an end. (In fact, without corresponding sales conversions, they’re nothing more than unjustifiable expenses.) If you only earn revenue from sales, you need statistics linking costs and sales. In other words, you need to measure cost-per-action (CPA).

Cost-Per-Action (CPA)

In a CPA campaign, you run an online ad on third party sites and they charge a commission when a lead is generated or converted. It’s performance-based pricing. This means the publisher wears most of the advertising risk, as their commissions are dependent on good conversion rates.

Perhaps the most widespread use of CPA is affiliate marketing. With affiliate marketing, you determine what actions you will reward and how much you’re willing to pay per action. For example, you might engage an affiliate site to promote your business. If they generate sales for your business, you can pay them a commission. Your cost-per-action would then be the cost per sale or lead generated.

Tips on Conversion

The following conversion tips will help you plan your CPA campaign and avoid some common pitfalls.

1) How are sales and leads recorded?

For many businesses, the obvious result which constitutes a conversion is a sale. If your sale is recorded or registered online (e.g. e-commerce), it can be considered a measurable action. This means you can choose a sale as the desired action in your CPA campaign.

Depending on the aim of your campaign, you may want to measure other outcomes in addition to, or instead of, sales. For instance, you might measure leads in the form of membership registrations, newsletter subscriptions, software downloads, or just about any other activity beyond simple page browsing. So when your customer clicks register, or subscribe, or download, etc., the conversion is automatically registered and the details are fed back you’re your CPA campaign.

In either case, at any time, you can log in and view your campaign results in real time.

2) Set up a landing page to capture lead contact details

If you’re paying for leads, you obviously need to know when a lead is actually generated. Generally a lead becomes a lead only when the customer supplies you with their details (name, contact numbers, email, etc.). This means you need to set up a landing page on your site capture these details. Your capture page can be collect contact information or it can be as simple as a signup for a monthly newsletter.

3) Get your CPA provider to set up your landing page

If you don’t have the time, inclination, or resources to set up the necessary forms and database on your own site, the CPA provider can do it on their hosted server. They collect the leads and calculate the statistics. For many businesses, this is the ideal option because it saves them time and money, and there are no tracking discrepancies.

4) Find a CPA provider you can trust

If your CPA provider will be collecting leads and calculating statistics, you need to know you can trust them. There are plenty of trustworthy providers out there; you just need to find them. A trustworthy provider will find out what your exact needs are and spend time researching your niche market online. By performing this marketing analysis, your provider will be able to tell you exactly how much business they can bring you on a daily, weekly, or monthly basis. If they can’t provide you with this important information, then this is a good indication that you are not speaking with a professional internet marketer.

Just as importantly, with a trustworthy provider you’ll be able to personally speak with the internet marketer who will be working on your project. This person will be an expert in the field of internet marketing, not just a sales rep.

5) Avoiding excess fees

WARNING: Some CPA providers charge a setup fee ($2,500 to $10,000) and/or a network fee (20% to 30%) for each sale or lead that is generated. Before committing to a provider demanding high fees, make sure you are getting more for your money. Most of the time high fees simply mean the sales rep is getting a higher commission!

6) Measuring your conversion rate

The Formula for measuring CPA is by dividing the total cost per advertising campaign by the total number of actions (conversions) that were received from each ad campaign. For example, if your online ad campaign costs $1,000 and generates 50 sales or leads, your cost per action (CPA) is $20.00 each.

7) Improving your conversion rate

A high conversion rate depends on several factors:

Visitor Interest Level – The interest level of the visitor is maximized by matching the right visitor, the right place, and the right time. Offer Attractiveness – The attractiveness of the offer includes the value proposition and how well it is presented. TIP: Small, impulse items typically have a higher conversion rate than large shopping items. Ease of Process – The ease with which the visitor can complete the desired action is dependent on site usability. Important considerations here include intuitive navigation, contact info capture page, “Buy Now” or “Apply Now” buttons and fast loading pages.

In summary…

Because CPA allows you to identify exactly how much it will cost to acquire a customer, there’s no guesswork involved. You have the ability to precisely calculate your ROI. And because online tools and ad serving technologies allow you to monitor effectiveness in real time, you can even tweak campaigns while they’re still running. If you can master effective online advertising, you’ll not only save thousands in implementation costs, you’ll also reap the rewards of a far higher return on investment.

In this article I will explain to you what Cost Per Action Marketing is, how you earn commissions and why you may want to look at this form of Affiliate Marketing as a way to make money online.   

So, What Is Cost Per Action Marketing? Cost Per Action Marketing, also known as “CPA Marketing” is a type of Affiliate Marketing that requires visitors to websites to complete certain actions, such as entering some contact information, (an email address for example) sign up for free trials or request a free product sample. Sometimes it involves asking the consumer to try a new product or service by making a small purchase. (Usually just small a shipping charge)

What this to means to you, as a promoter is you get paid for “actions” taken by the traffic you send to advertisers. For example, a company has a new product they are introducing. They agree to pay the promoters $3.00 for each visitor that submits their email address.

Your job is to send traffic to their site and then collect $3.00 for each visitor that enters their email address. Other promotions may need more information than just an email address or require an upfront payment, so they will pay more for an opt in. (More Information, More Money)

As a CPA Marketer your job is to just send traffic to the companies website. You basically buy traffic for their offer and send it their way and get paid for visitors that opt in. So in what you are in practice is a Traffic Broker. Sounds simple, doesn’t it? It can be, but it generally isn’t. Like anything else there are some tricks to learn.

If You are familiar with PPC or Cost Per Click, CPA is very similar as you pay for advertising your promotions, the difference is that with CPA you will normally pay for impressions “CM” which is 1000 views for a set rate per 1000 views instead of paying for each click. But just for example you may only pay $20 for 1000 views….

So if you have a good offer (Like something Free for just entering a email address or zip code) and you know everyone Loves Free Stuff. You can do really well with CPA Marketing.

Because CPA Marketing is so profitable, CPA marketing is very competitive for the beginner, it can be a long tough road trying to compete with affiliates making thousands of dollars a day, or even affiliates that make hundreds a day with CPA Marketing.

When your just getting started, your competition can be very hard. Many beginners simply give up when they figure out that CPA marketing isn’t going to make them rich overnight.

But before I scare you off, CPA Marketing can be one of the easiest methods for someone new to Internet Marketing to begin seeing profits as fast as possible. Once you get the hang of Cost Per Action Marketing the sky can truly be the limit. This type of Affiliate Marketing has been a secret weapon of the Make Money Online Superstars.(Because it is highly profitable)It was never really a “secret” but while most people in Internet Marketing have been promoting ClickBank products, the Guru’s have been playing on a completely different level.

You just need the right information to avoid the pitfalls and straighten out that nasty learning curve. For example, which offers to promote and where and how to promote them. It all comes down to tips and tricks.

OK, so now you should have the basic ideal of what CPA Marketing is, a little of what it involves and maybe you may want to look at it a little bit closer. For more information and videos about CPA Marketing stop in and have a look around my website and thanks for reading my article. Watch The Video.