CPA MARKETING

What is CPA Marketing?

CPA marketing, also known as cost per action marketing, is a style of the affiliate marketing model that offers a commission to the affiliate when a specific action is completed.

The lead action can be anything from making a purchase to getting a quote, watching a video, or filling out a form.

CPA networks then promote these campaigns through affiliates.

The CPA affiliates are paid a set fee each time a referred visitor completes the action or offer.

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How Does CPA Marketing Work?

The CPA model is a simple concept once you break down into how it works and who’s involved.

• Affiliate or Publisher: The influencer (blogger, brand, business) that promotes a business or product in order to drive traffic to the ecommerce site and make a specific conversion.
• Business or Advertiser: The brand that desires a partnership with an affiliate to drive quality traffic to the business’ website and increase sales, generate leads, or boost conversions.
• CPA Network: The platform that brings together the affiliate who wants to make money by promoting products and the businesses that want their products promoted.

Let’s say a popular cooking blogger named Lisa (our affiliate in this story) has a healthy following of YouTube subscribers and blog readers.

She learned how to start a new blog to make a living in her kitchen—trying new recipes and recommending specific brands and products to her audience.

After developing a guest blogging strategy, increasing web traffic, and building a cult following, her cooking crowd is eager to buy the next kitchen gadget she recommends.

Then we have our example business, EasyCooking.

EasyCooking manufactures high-quality kitchen gadgets – from cutting boards and measuring cups, to professional mixers and food processors. They’re looking to expand their marketing reach and would love to take advantage of Lisa’s audience of budding chefs.

A CPA marketing network brings Lisa and EasyCooking together.

Influencers like Lisa, who want to make money doing what they love and engaging their audience, can turn to CPA networks to find companies that want to pay her to use and promote their products.

Lisa sends her audience to the business’ website and makes a commission on each sale or lead conversion.

In turn, EasyCooking makes money from Lisa’s referral traffic.

The network brings them together and the audience gets to try new products and learn about emerging brands. It’s a win-win.

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CPA Network Terminology

CPA network terminology isn’t complicated, but there are a few key terms you should know as you launch.

• Affiliate Manager: A person who manages an affiliate program for a merchant. They are responsible for recruiting, engaging with affiliates, and generating revenue for the merchant.
• Category: The niche for which the CPA offer applies (sports, fashion, beauty, health, etc).
• Chargeback: When a sale “falls through” for an action an affiliate has already paid for. Since the sale was never finalized or an item was returned, the previously given commission is deducted back into the advertiser’s account.
• Commission: The payment an affiliate receives—either a flat rate or percentage—once a successful conversion is tracked.
• Contextual link: A text link placed within an affiliate website that links to the advertiser’s website.
• Conversion rate: The percentage rate at which a particular action is performed. In other words, the number of successful conversions divided by the total traffic.
• Cookies: In affiliate marketing, cookies are used to assign a unique ID to a user who has clicked the affiliate link to an advertiser’s site for a specific duration. The affiliate will receive credit for the conversion in this predefined window, typically 30-90 days.
• Cost per action (CPA): An online advertising strategy that allows an advertiser to pay for a specified action from a target customer.
• Earnings per click (EPC): The average amount an affiliate earns every time a user clicks an affiliate link.
• Offer page: The webpage where the conversion occurs after a visitor takes the required action.
• Return on investment (ROI): Refers to the amount of money made with a campaign. It is the revenue divided by the ad spend, multiplied by 100.

• CPA Marketing Payment Model

• The payouts differ based on competition and average commission rates in each vertical.
  For example, headphone manufacturer Skullcandy’s successful affiliate program offers a 5% commission on sales based on a competitive electronics category.
  Kelty, the outdoor camping gear company, provides affiliates up to 10% on a tiered commission structure. It’s all based on the competition within your vertical.
  The cost per action formula is a very low-risk method for advertisers, as they only pay for the desired actions after they occur; unlike paid traffic, for example, where you just pay to get people on your site through ads.
  The cost per action for an advertiser can be determined by dividing the total cost of the marketing campaign by the number of successful actions taken.
  Let’s look at our pretend company, EasyCooking, as an example.
  If EasyCooking spends $1,000 on a marketing campaign and gains 25 successful conversions on a signup form for a recipe ebook, the cost per action is $40.
  While the cost per action varies by industry, Google AdWords reports the average cost per action across all industries is $48.96.
  • The automotive industry has the lowest CPA at $33.52.
  • Technology has the highest CPA at $133.52.
  The top 10 percent of advertisers boast CPAs up to five times