What is CPA (Cost Per Action)? - Definition
CPA is one of the key performance indicators. It shows us how much we have to pay for performing the expected action (e.g. completing the form, downloading the e-book or the sale itself). Setting a target rate for this indicator, i.e. cost per share, will allow you to estimate the number of conversions within your budget.
Cost Per Action indicates the cost of obtaining one specific action, which we call with an advertisement. We can say that it's the average cost of one lead, conversion or purchase.
Depending on the type of agreed actions, other payment models can be distinguished:
CPL - cost per lead - the advertiser pays for receiving contact to the user, most often it consists in filling out the contact form and leaving an e-mail address or phone number.
CPD - cost per download - the desired action is to download the file from the site.
CPS - cost per sale - is a model in which the expected effect is the sale of the product.
CPC - cost per click - in this model the advertiser pays for clicking on the advertisement which redirects the user to the page.
CPV - cost per view - the expected action is to watch a video advertisement.
Advantages of the CPA model
Efficient payment models are becoming more and more popular for a reason. The CPA billing model has significant advantages, first and foremost the advertiser pays for the expected effect achieved thanks to the advertisement. Consequently, the CPA makes it easier to plan the budget of advertising campaigns, assuming specific goals you want to achieve, you can estimate the costs of the campaign in a fairly accurate way. Even in the case of a failed campaign and its low efficiency, we gain an increase in brand awareness among recipients, because no advertising costs are incurred.
The principles of the CPA efficiency model
For an advertising campaign based on the CPA billing model to be effective, you must:
carefully choose the shares that will be the basis for settlement,
properly choose the content of the creative and limit it only to take a specific action,
prepare a landing page that easily leads to conversion,
constantly analyze conversion paths, control efficiency and optimize CPA
Checking the effectiveness of the CPA model
Because in the CPA billing model you pay for the achieved advertising effect, tracking these effects is extremely important. We can do this for:
Google Analytics - allows you to track conversions using appropriately marked links, or implement tracking codes on the thank you page - they enable you to get the exact number of completed subscriptions, downloads, etc.
Discount codes - customers enter them when making transactions, they are particularly effective in e-mail campaigns and social media.
- adapt your marketing campaign to the right recipients, make sure that you clearly communicate the values on which potential customers care, it is the best way to encourage Internet users to go to the landing page.
- CPA optimization is closely related to CRO (conversion rate optimization), when a user enters the page, his message must be closely related to the content of the ad. Texts, graphics, all individual elements must clearly lead to the goal of conversion.
- set a few goals - even if the main goal is sales, it is worth setting additional goals such as time spent on the site, number of visited subpages, it will give a better picture of user behavior, will allow to detect possible problems and introduce improvements that will ultimately improve the main goal of the advertising campaign which is sales.