Cost per action

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.

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.) Google has incorporated this model into their Google AdSense offering while eBay has recently announced a similar pricing called AdContext.

The CPA can be determined by different factors, depending where the online advertising inventory is being purchased.

CPA as "Cost Per Acquisition"

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 (mostly new customers, prospects or leads). Using the term "Cost Per Acquisition" instead of "Cost Per Action" is not incorrect. It is actually more specific. "Cost Per Acquisition" is included in "Cost Per Action", but not all "Cost Per Action" offers can be referred to as "Cost Per Acquisition".

Effective cost per action

A related term, eCPA or effective Cost Per Action, is used to measure the effectiveness of advertising inventory purchased (by the advertiser) via a CPC, CPM, or CPT basis.

eCPA is used to measure the effectiveness of advertising inventory purchased (by the advertiser) via a CPC, CPM, or CPT basis. In other words, the eCPA tells the advertiser what they would have paid if they purchased the advertising inventory on a CPA basis (instead of a CPC, CPM, or CPT basis).

Companies

• Google started testing CPA on 2006. On June 2007 Google expanded its beta trial, opening it to users of AdWords

• EBay has moved into CPA advertising with its AdContext system on 2006

• Snap.com, CPA pioneer and later merged with other to form NBC Internet (NBCi), has long touted the advantages of the CPA model, such as the elimination of click fraud.

• ViralyticsMedia.com, Created the first CPA e-mail marketing network in the Fall of 2007..

• Jellyfish.com was the Internet's first comparison shopping search engine to operate exclusively on a Cost Per Action (CPA) ad model, has a patent pending on an improvement over CPA where part of the ad revenue goes to the customer, and has been bought by Microsoft for integration into Live Search.

See also

• Affiliate marketing
• CTR - Click-through rate
• CPC - Cost Per Click
• Cost Per Conversion
• CPI - Cost Per Impression
• CPM - Cost Per Thousand
• CPT - Cost Per Time
• CPA - Cost Per Action
• eCPA - Effective Cost Per Action
• eCPM - Effective Cost Per Thousand
• CPD - Cost per Day
• Internet marketing
• PPC - Pay Per click (Search engines term for CPC)
• Revenue Share - Cost derived from advertiser income
• VPA - Cost Per Action variation that transparently balances incentives between vendors and consumers
• Compensation methods