CPA

(Cost Per Action)

 

When web advertisements are priced neither by impressions or clicks but only when the user takes some action like completing a form, the most common abbreviation is CPA, or "cost per action".

If CPA pricing is used, an ad could be shown many times and even generate many clicks, but a charge will be incurred only when the user takes the desired action. CPA pricing is desirable for advertisers who feel that they can make their ad spend fully accountable because they are paying only for high quality visits, i.e., those where the consumer has demonstrated sufficient interest by completing a form or similar action.

Advertisers using CPA pricing don't have to worry about paying for wasted impressions ( as they might with CPM advertising), nor do they have to worry about click fraud as they might with CPC / PPC ads.

Of course, what's good for the advertiser may not be attractive for the publisher. When running CPA ads, the publisher can be paid only if the ad generates a click, and the user takes the desired action. This means that the publisher is relying on the advertiser to create an attractive ad that generates clicks, and also to convert a reasonable number of those clicks into actions. If the advertiser has a badly designed site, e.g., the form is hard to find, or the form looks long and complicated, very few clicks may convert into actions. Hence, publishers tend to use CPA mostly for proven offers and ones where they have checked the site for ease of use.

Calculations using CPA pricing are simple - if the quoted rate is $10.00, that is the amount that will be charged for each action, e.g., 25 completed forms = $250. CPA rates can vary from a great deal, but are usually many times higher than CPC pricing for the same keywords.

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