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{{Multiple issues |cleanup=August 2011 |original research=August 2011}} |
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{{Internet Marketing}} |
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'''Cost Per Action''' or '''CPA''' (sometimes known as '''Pay Per Action''' or '''PPA''') is an [[online advertising]] pricing model, where the advertiser pays for each specified action (a purchase, a form submission, and so on) linked to the advertisement. |
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[[Direct response]] advertisers consider ''CPA'' the optimal way to buy [[online advertising]], as an advertiser only pays for the ad when the desired action has occurred. An ''action'' can be a product being purchased, a form being filled, etc. The desired ''action'' to be performed is determined by the advertiser. Radio and TV stations also sometimes offer unsold inventory on a cost per action basis, but this form of advertising is most often referred to as "per inquiry." |
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The ''CPA'' can be determined by different factors, depending where the online advertising inventory is being purchased. |
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==CPA as "Cost Per Acquisition"== |
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CPA is sometimes referred to as "Cost Per Acquisition", which has to do with the fact that most CPA offers by advertisers are about acquiring something (typically new customers by making sales). Using the term "Cost Per Acquisition" instead of "Cost Per Action" is not incorrect in such cases, as not all "Cost Per Action" offers can be referred to as "Cost Per Acquisition". |
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=== Formula to calculate Cost Per Acquisition=== |
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Cost Per Acquisition (CPA) is calculated as: ad campaign cost/[number of impressions x CTR x CR]. Example: an advertiser pays a [[Cost Per Thousand|CPM]] of $10. For 20,000 impressions the advertiser has 5 percent click-through rate (CTR) to the landing (destination page). 30 percent of those 5 percent convert to paying customers(CR). The calculation is: ($10.00 * 20,000Impressions / 1000)/(20,000*0.05*0.30) = $0.67. That is, the cost per acquisition is $0.67. |
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==PPL as "Pay Per Lead"== |
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Online and Offline advertising payment model in which fees are charged based solely on the delivery of qualified leads. |
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In a pay per lead agreement, the advertiser only pays for leads delivered under the terms of the agreement. No payment is made for leads that don't meet the agreed upon criteria. |
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Leads may be delivered by phone under the [[pay per call]] model. Conversely, leads may be delivered electronically, such as by email, SMS or a ping/post of the data directly to a database. The information delivered may consist of as little as an email address, or it may involve a detailed profile including multiple contact points and the answers to qualification questions. |
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There are numerous risks associated with any Pay Per Lead campaign, including the potential for fraudulent activity by incentivized marketing partners. Some fraudulent leads are easy to spot. Nonetheless, it is advisable to make a regular audit of the results. |
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==Differences between CPA and CPL advertising== |
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In CPL campaigns, advertisers pay for an interested lead (hence, Cost Per Lead) — i.e. the contact information of a person interested in the advertiser's product or service. CPL campaigns are suitable for brand marketers and direct response marketers looking to engage consumers at multiple touch points — by building a newsletter list, community site, reward program or member acquisition program. |
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In CPA campaigns, the advertiser typically pays for a completed sale involving a credit card transaction. |
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There are other important differentiators: |
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# CPL campaigns are advertiser-centric. The advertiser remains in control of their brand, selecting trusted and contextually relevant publishers to run their offers. On the other hand, CPA and affiliate marketing campaigns are publisher-centric. Advertisers cede control over where their brand will appear, as publishers browse offers and pick which to run on their websites. Advertisers generally do not know where their offer is running. |
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# CPL campaigns are usually high volume and light-weight. In CPL campaigns, consumers submit only basic contact information. The transaction can be as simple as an email address. On the other hand, CPA campaigns are usually low volume and complex. Typically, consumer has to submit credit card and other detailed information. |
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==Effective cost per action== |
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A related term, [[effective Cost Per Action|eCPA]] or [[Effective Cost Per Action]], is used to measure the effectiveness of advertising inventory purchased (by the advertiser) via a [[Cost Per Click|CPC]], [[Cost Per Impression|CPI]], or [[Cost Per Thousand|CPM]] basis. |
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In other words, the '''eCPA''' tells the advertiser what they would have paid if they had purchased the advertising inventory on a Cost Per Action basis (instead of a Cost Per Click, Cost Per Impression, or Cost Per Mille/Thousand basis). |
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==References== |
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{{Reflist}} |
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{{DEFAULTSORT:Cost Per Action}} |
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[[Category:Pricing]] |
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[[Category:Internet advertising methods]] |
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[[Category:Compensation methods]] |
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[[de:Cost per Action]] |
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[[et:Tulemuspõhine tasustamine]] |
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[[fr:Coût par action]] |
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[[ko:행동당 비용]] |
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[[pl:Pay per lead]] |
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[[ru:Cost Per Action]] |
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[[vi:Cost Per Action]] |
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[[zh:每行动成本]] |
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Revision as of 17:39, 30 January 2013
avc