What Is CPA in Digital Marketing?

What Is CPA in Digital Marketing?

CPA in digital marketing is an acronym for cost per acquisition or action. This cost refers to a business’s ability to convert ads. More specifically, it’s a fee a company pays whenever an ad results in a sale. 

In the case of cost per action, the company pays a fee when the ad results in an action taken by a customer. The action could be anything from subscribing to a newsletter to downloading an eBook. Actions generally refer to when consumers click on a particular button that takes them to a separate page or acts as a download link.

The company and publisher will discuss and determine the fee in advance — then, the pressure is on the publisher to deliver converted leads through the ads. CPA advertising favors the business more than the publisher in most cases due to the lack of risk, but the publisher will often offer CPAs as an easy way to fill out their workload.

This specific digital marketing model is useful for companies who need guarantees of results from their ad campaigns. It’s also relatively low-risk since the business will only have to pay for the ads that lead to a sale or action.

CPA in digital marketing isn’t the only form of performance-based advertising, though. CPC (cost per click) ads are another popular way to purchase ads, which costs a small fee every time a customer clicks on one of their ads.

Outside of performance-based advertising, there’s also the CPM (cost per mille) pricing model. This pricing model requires the advertiser to pay for every 1,000 views of the ad.

So shouldn’t advertisers always choose a CPA pricing model? While it’s the most appealing, as it seems to guarantee leads, this isn’t always the case.

An effective CPA advertising campaign relies heavily on the strength of the company’s website and its conversion rate. This is because the ad will take the customer to the website, where the purchase or action will take place. As such, it can be a complicated pipeline to navigate for customers and could cause the potential sale to fall through at any stage.

The precarious nature of this pipeline means that you should be confident in your content and SEO practices if you plan on using a CPA pricing model. It isn’t as simple as relying on the quality of the ads to secure and convert leads, as in the case of the CPC or CPM models.