What Does CPA Stand for in Marketing?

What Does CPA Stand for in Marketing?

There’s no shortage of acronyms in the marketing world. From CMO to PPC and CPA, each of these acronyms represents an important marketing function and process. While you probably know that CMO stands for chief marketing officer and PPC stands for pay-per-click, you might be asking yourself exactly what is CPA in marketing? 

CPA in marketing stands for cost per acquisition or action and is a type of conversion rate marketing. Cost per acquisition refers to the fee a company will pay for an advertisement that results in a sale. Similarly, cost per action refers to the fee a company will pay for an advertisement that results in an action, like signing up for a newsletter or downloading an eBook. In either form of CPA, the company only pays for the advertisements that resulted in sales. 

Why is CPA important?

CPA advertising is often used when companies are undertaking affiliate marketing on external websites, blogs, or social media. When companies engage in advertising that results in a particular fee for each advertisement clicked, this is called cost per click (or CPC) advertising. The threshold for payment is considerably lower than CPA advertising. Both types of advertising are considered performance-based advertising because the reader’s or viewer’s performance dictates the fee. 

When agreeing on a CPA advertising contract, the company and advertising publisher will need to agree on the amount paid for each acquisition or action completed. This type of arrangement typically puts more risk on the ad publisher because it relies on their ability to draw customers and push them to achieve the action. However, CPA advertising can be appealing to publishers who have extra ad space to fill that might otherwise go unused.

For the advertiser, CPA advertising entails low risk because they aren’t required to pay for ads that are published but don’t result in conversions. In contrast, CPC advertising can run the risk of being exposed to click fraud, where the ads are clicked on fraudulently to run up the advertising fee.