What Is CPA in Digital Marketing: Everything You Need to Know

What Is CPA in Digital Marketing: Everything You Need to Know
Article by Bisera StankovskaBisera Stankovska
Last Updated: July 17, 2022

When a business sells products online, it can reach a virtually broad audience, but targeting and converting the right leads is not always easy. Conversely, CPA (cost-per-acquisition) is a type of affiliate marketing that businesses use to scale their marketing efforts and convert a vast audience.

That is why it is vital to learn what CPA is in digital marketing and how indispensable it is for today’s businesses.

Before moving on to the definitions and details, let’s first understand that CPA marketing requires businesses to pay only after the sale. This makes it different from the other tactics like Cost per Click or CPC, where companies need to pay for advertising without any guarantee of a sale.

Therefore, in the CPA marketing model, the publisher undergoes higher risks than the advertiser. This is because their potential to earn depends directly on their ability to attract and convert the audience into high-paying customers.

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What Is CPA in Digital Marketing?

The CPA (cost-per-acquisition) form of digital marketing is based on an advertising model that comprises a publisher (affiliate), a company/business (advertiser), and a CPA network. This CPA network is a platform bringing together the affiliates willing to earn commissions by promoting products and the businesses that are looking for their products to be promoted.

Advertisers typically use the CPA network to get through the best affiliates who can advertise their products. This advertiser can be a publisher or an influencer capable of creating good, relevant content and already has an established audience.

The CPA network is an integral part of this marketing model because it enables matching the affiliates and the advertisers. This way, the influencers can endorse the products they are inclined to while earning a sales commission through it. Businesses, on the other hand, can reach a wider customer base than they have access to.

Another significant function of the CPA network is managing the relationship between the advertisers and publishers and being responsible for managing the payments.

Why Is CPA in Marketing Important?

CPA advertising is one of the leading digital marketing trends, and that’s not without reason. To understand the fundamental importance of CPA marketing, we need to analyze how it works.

As a form of online marketing, CPA is used when companies undertake affiliate marketing on external websites, social media, or blogs. When the advertising requires the company to pay a specific fee for each advertisement clicked, it is called the Cost per Click (CPC) advertising.

When working with a CPA advertising contract, the advertising publisher and the company agree to pay a fixed amount for each action or acquisition. This puts a little extra pressure on the ad publisher because their ability will help achieve the action.

But CPA advertising is low risk for the advertiser because they are not required to pay for the advertisements that are published but do not convert. It is also beneficial for the publishers with extra ad space to fill.

However, CPA advertising is also performance-based because it is ultimately the performance of the reader or the viewer that determines the fee. Performance is tracked through marketing analytics and metrics.

What are the 3 Categories of CPA in Digital Marketing?

Based on the way the CPA advertising model works, it can be categorized into three types:

1. Pay Per Action

In this category of CPA marketing, the publisher receives a commission only when the customer takes a particular action. This action might include visiting the advertiser’s website, signing up for a trial, or subscribing to a newsletter.

2. Pay Per Sale

In this mode, the advertiser pays a percentage of the product’s sale price to the publisher after the customer has purchased an item, triggered by the affiliate marketing strategies. If a sale is made, the publisher only receives a commission.

3. Recurring Payments

Alongside Pay Per Action and Pay Per Sale categories, there are affiliate programs where the affiliates pay a one-time commission whenever a customer makes a purchase. The recurring payments affiliate model, however, ensures that the publisher receives payment every time a customer makes a repeat purchase.

Benefits of CPA in Marketing

There are many benefits of CPA in digital marketing, the most obvious being its promise of a broader audience to the advertisers and increased return on ad spend (ROAS). Some of the other prominent benefits are:

Integrated Advertising

By partnering with publishers, companies can build product awareness with a broader audience. This is because influencers and content creators have audiences that trust them. So, promoting your products on their site leads to reputation and brand awareness building.

Increased ROI

CPA marketing offers a greater ROI because businesses pay only a commission when a sale is made. The Commission can be a percentage of the sale price or a flat rate. This makes this model highly affordable.

Reduced Risk

CPA marketing is an essentially low-risk form of affiliate marketing. You are required to pay only after you have made a conversion. This makes sure that any referral you receive generates value. Simultaneously, there is a vast reduction in the chances of an affiliate tricking the system to inflate the website traffic or inflate the clicks artificially.

Ease of Use

It is relatively easy to set up a CPA marketing campaign. You can simply choose a CPA network and a suitable offer with a low upfront cost. Alternatively, you can appoint an affiliate manager to negotiate affiliate agreements and earn the commissions paid automatically by the chosen payment processor.

What is the CPA Online Marketing Best Practices?

There are certain CPA online marketing best practices that you need to follow to make the most of the CPA marketing campaign. These are followed by some of the best digital marketing consultants.

Bonding with the Affiliate Managers

An affiliate manager in the CPA model is integral because he oversees the affiliate program on your behalf. That is why it is essential to find an affiliate manager who enables you to build a positive relationship with the affiliate partners.

The affiliate managers also often provide creative input to allow the affiliate partners to create the most relevant content. A good bond ensures that you are able to negotiate with the publishers as per your requirements.

Avoiding Shady Networks

When affiliates artificially inflate engagement metrics such as traffic or clicks to earn commissions, affiliate fraud occurs. Some of the affiliates also publish low-quality content that harms your brand reputation.

It is necessary to avoid such shady networks and choose high-quality CPA network that promises a strict vetting process for publishers.

Joining a CPA Network

If you are a beginner in online marketing, joining a good CPA network allows you to seamlessly choose a CPA offer and start getting referral traffic from affiliate sites. A network that provides a powerful dashboard to track important metrics is ideal.

With a CPA network, you can use marketing analytics tools and enjoy a long list of offers to choose from at any particular time. Some networks also offer creatives in the form of banners, landing pages, and recommended ad copies to make it easy to kick start a campaign.

Implementing Traffic Strategies

Once you have got an offer and joined a network, it is time to drive traffic to your website. The most common traffic implementing strategies are email marketing, SEO, PPC ads, native ads, social media, and Google ads.

Considering the CPA Marketing Payment System

To set up payments for affiliate commissions, you select a payment structure and a payment processor. You will have to decide whether you want to pay your affiliates on a pay per click, pay per action or recurring sale basis.

A lot of CPA marketing payment processors also offer chargeback protection. This is kind of a money-back guarantee if a customer backs out of a sale and fraud prevention. A payment processor also enables you to track and manage your CPA marketing expenses from a dashboard.

What is CPA in Digital Marketing Takeaways

Thus, CPA online marketing is a cost-effective yet high ROI form of affiliate marketing enabling businesses to reach niche audiences by partnering with influencers and generating money online.

As a business, if you want to get started, you should first join a CPA network and start working with an affiliate manager. This manager will match and connect you with qualified publishers.

Selecting the ideal CPA network is often the key to achieving the best-possible conversions and revenue from CPA marketing.

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