The concept of CPA is constantly encountered in traffic arbitrage. It can be found when working with affiliate programs, setting up advertising campaigns, and analyzing the traffic you receive. Each of them uses CPA to define specific tasks. In today’s article, we will take a closer look at this concept, figure out what it is created for and how to work with it properly.
The CPA model: definition and purpose
CPA (Cost Per Action) is a marketing metric that shows the total cost of a user to perform a specific action. It is calculated to determine the price per conversion event and helps to understand the profitability of the investment.
Advertising networks give you a choice between CPA, CPC (cost per click) and CPM (cost per 1000 impressions) and other advertising payment models. The reason the CPA model is preferable is because you pay for direct results. However, this option is not always the most profitable.
In traffic arbitrage, webmasters may often come across the CPA model payment method when choosing an offerer. In this case, it implies that the payment will be made only if the referred client performs a certain action. This can be registration on the site, filling out a form, buying a product, and so on.
CPA payment models
It is up to the advertiser to determine and set which events he is willing to pay for. Therefore, all the actions covered by this model are different in each case. In turn, the price depends on the complexity of the task.
Different verticals and offers offer different types of CPA model. So, for example, in Gambling and Betting CPA payment is made if the user makes a deposit for a certain amount, the Tovarka pays for the sale of the product, and Dayting CPA is divided into SOI (Single Opt-in), DOI (Double Opt-in), as well as CPS (Cost Per Sale). Each type implies a different target action: SOI, as a rule, means a simple registration, DOI – an additional action to registration (confirmation of mail, filling out the profile, etc.), while working with CPS payment is made if the client signs up for a paid subscription to the service.
Why choose CPA?
Regardless of whether the advertiser works directly or through an affiliate network, the CPA model is very profitable for him. He can independently choose the desired conversion action and set the desired price for it. In addition, he pays only on the fact of achieving a successful event, and because this directly affects the income of the webmaster, the advertiser receives high performance.
Payment for advertising on CPA
Popular advertising networks always ask what goals you are aiming for (more views, site visits, sales, etc.) when setting up campaigns. This happens so that the algorithms optimize ads for maximum effectiveness and benefit to you. However, this has nothing to do with the advertising payment model. In most cases you will work with CPM (Cost Per Mile) and CPC (Cost Per Click).
The CPA model can be presented in many different ways. And in fact, some of them can be found quite often, but still the key factor is the specifics of the chosen advertising channel.
Here are the main types of calculations in CPA:
- CPL (Cost Per Lead) – the payment is made for each lead. In this case, do not confuse the lead and the conversion. A lead is a client who has left and confirmed his contact information.
- CPS (Cost Per Sale) – with this model you pay only for the sale of the product.
- CPI (Cost Per Install) – this type of calculation is used for promoting mobile applications. The payment is made for each successful installation.
- CPV (Cost Per View) – is the payment for the views of the video. In this case, you always set a minimum viewing time, after which the action is counted.
CPA as a metric
As we have already found out, when working with popular ad networks, there is a choice between CPA, CPM and CPC. In any of these cases, in order to profit from the offerer, the webmaster needs to be able to properly optimize the advertising campaigns for the tasks at hand. To do this, you have to constantly compare how profitable the chosen ad bundle is.
You can determine how much a particular action will cost you. To calculate CPA campaigns, use the following formula:
CPA = ad spend ÷ number of targeted actions
Example: we have selected an offer which will pay $200 for each sale using CPA model. The cost of launching the advertising campaign was $10 000. It brought us 80 sales. Let’s calculate the CPA bindings: 10 000 ÷ 80 = $ 125. It turns out we were in the plus from each sale of $ 75, and the total profit was 75 * 80 = $ 6,000.
These calculations are made manually is not necessary. You can use the built-in analytics tools within the advertising network or special trackers. You can view a selection of popular trackers here.
How to optimize CPA
CPA becomes a very useful metric when you determine how much a specific customer action on your offer is worth. Depending on its value, you will be able to understand what actions you should perform next – if the rates are good, you can start scaling the bind, and if the rate is low, you will have to optimize it.
Here are some possible ways to improve your CPA score:
- Tweaking the campaign.
To increase conversions, you need to make sure that your ads are shown to the right audience segment, and that the creatives you choose entice users to click through to the landing page. Try different combinations and determine the best one. - Branding content.
Once a new visitor gets to the landing page, he has a certain first impression. Depending on it the user commits further action. The content of the landing page should correspond to and reveal what was said in the advertisement. A content and page design should not cause negative feelings. - Use other indicators.
Even if your main goal is to get a customer to buy something, you should definitely track other key metrics. CTR values (click-through rate), the number of users who clicked on the landing page, time spent on the page, and more can be tracked with a tracker. This will give a full understanding of how your link works and where problems are likely to occur. In any case, you can make corrections.
That’s it for now. We’ve covered the main points related to the concept of CPA. We hope this article has given you a full understanding of this aspect. If you still have questions, feel free to ask them in the comments section below. Good luck!