What is Cost Per Action ?
Cost Per Action or CPA is an advertising term used to define how advertisers pay for served ads. As opposed to CPM, with CPA, advertisers pay to publishers only when a user takes a pre-determined action such as signing up for a mailing list or buying a product.
CPA is a beneficial payment model for advertisers as there is very little risk due to paying only when a viewer has taken a meaningful action. It’s also commonly used in affiliate marketing, as the advertisers only pay affiliates if they successfully drove the sale.
This method of payment in advertising is most common in online advertising, although it can be offered by some TV and radio stations under the term “per inquiry”. In print media, ad inventory is rarely sold on a CPA basis.
CPA results are commonly tracked through three mechanisms: cookie tracking, telephone tracking (publishers have unique phone numbers for an offer) or promotional codes (viewers have to use codes specific to publishers).
CPA is also known as “Cost Per Acquisition,” although the definition of it may vary depending on what an advertiser considers to be an acquired customer.
The formula for calculating CPA is ;
CPA = total cost / number of actions