What Is CPA and How Can Advertisers Benefit?

 “CPA, or cost per action, is the Holy Grail for targeted advertising.”

                                                               -Marissa Mayer, President and CEO, Yahoo

Over the last decades, the internet has become an important and main source for advertising. Online advertising took over the advertising medium and according to statistics only in US advertisers spend more than $31 billion on online advertising.

At the beginning of the online advertising technology, advertisers were mainly using the simplest pricing model called CPM or cost per thousands of impressions. This strategy means that advertisers pay a specific amount of money for every thousand displays of their advertisements. CPM became very popular after it was adopted by the Google-owned technology called DoubleClick.

Performance-based pricing

With the advances in online advertising technologies, advertisers and publishers started to use performance-based pricing. The first pricing model of performance-based pricing is CPC or cost per click. In this setting, advertisers are only paying if the viewers click on their advertisement. Leading companies like Google and Yahoo adopted this model as well,and it became popular rapidly.

Now, a new performance-based pricing is being introduced: CPA

This new model is called CPA or cost per action. Cost per action manages advertising payments when specific actions are taken. These actions include email sign-ups, downloads, purchases and much more. In other words, advisers pay every time a third-party click on his advertisement AND sign up for a trail of his product, download, register or purchase a product.

So, how is CPA beneficial for advertisers?

• CPA is less risky!

The main advantage of cost per action pricing model is that it is less risky than any other online advertising model. Because advertisers pay only when a lead or a sale is made, it eliminates the chances that advertisers will waste money on advertisements that do not benefit the business.

• No frauds!

Cost per action pricing model also completely removes the possibilities of getting involved in frauds. Nowadays, many auto-clicking software and tools are developed that flood pay per click schemes with frauds. However, with cost per action model, there are no chances of getting tricked.

•  CPA ease the process of planning the budget!

 With CPA, advisers have freedom to choose how much they are willing to pay to publishers. Advisers can manage their budget based on their preferences and priorities. If it is important for advisers to have more subscribers, they might consider raising the price for every subscription. CPA enables advisers to manage each action this way!