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What is CPA marketing or Cost Per Action marketing, and how does it work?

Here’s the de facto WikiPedia explanation on CPA marketing:

Cost Per Action or CPA (sometimes known as Pay Per Action or PPA; also Cost Per Conversion) is an online advertising pricing model, where the advertiser pays for each specified action – for example, an impression, click, form submit (e.g., contact request, newsletter sign up, registration etc.), double opt-in or sale.

That’s a very broad definition of CPA. In reality, the advertising world uses the term CPM (Cost Per Mille) to track banner impressions, and CPC (Cost Per Click) to track clicks and unique visitors.

We find the word CPA used in many affiliate networks and advertising platforms, each with a slightly different variation of what CPA means. So here’s a diagram to explain what CPA really means, according to us, in layman terms:

CPA Marketing for Agencies

For advertisers and agencies, CPA marketing means generating a lead or sale on their website. This is also referred to as “Performance-Based Marketing”, or a method for pricing ads and traffic based on the action generated by that ad. For agencies, this is something new, as their typical model is CPM or CPC. In fact a lot of agencies today still display on those two models.

CPA Marketing for Affiliates

For affiliates, CPA affiliate marketing means getting paid for a sale or lead. However, here’s where the misnaming occurs.

Some affiliate networks use the term CPA to refer to lead generation offers, which are also called “Lead Gen” in some instances. In such cases, the traditional model of getting paid a percentage commission based on sale is referred to as “Rev Share”.

Also, since affiliates are more concerned with how much they get paid, the term PPL (Pay Per Lead) and PPS (Pay Per Sale) is also used in some networks.

There  is no industry standard naming guide, so it’s messy and confusing. Generally speaking however, the term CPA has been used so inaccurately by tons of CPA marketing networks and CPA marketing programs, that the term now simply means getting paid a fixed sum for generating a lead to a free offer. 

In our own affiliate network, Ashadee, we refer to it as CPL or Cost Per Lead. This is what the mainstream advertising industry uses, so were sticking with that.

No matter what actual term is used, CPA marketing is beneficial to advertisers and affiliates.

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