CPA = Cost Per Action Marketing – Read on to learn more…
If you’re in the world of affiliate marketing, you’ve probably heard of CPA marketing as some hidden secret society where people make millions online. Indeed, this is the impression that many people get when they first begin researching what CPA is; I know because I was one of them. I recall wondering if I was really qualified to be investigating them at the time, and I remember my very first interview.
MaxBounty was the first network I joined, and as they re-launched their redesigned website today, it reminded me of my initial experiences in the world of CPA marketing. I decided to write an article to clarify the myths about CPA and provide a basic outline of what it is.
This beginner’s guide is going to walk you through how CPA works and will cover:
- What is CPA?
- How does CPA work?
- CPA payment model.
- Benefits of CPA.
- Top CPA affiliate networks.
- BONUS Tips to better your CPA strategy.
Table of Contents
What is CPA Marketing?
CPA marketing, also known as cost per action marketing, is a type of affiliate marketing model in which the affiliate receives a fee when a certain activity is done.
Making a purchase, requesting a quote, watching a video, or filling out a form are all examples of lead actions.
Ecommerce sites all over the world can leverage CPA to produce various offers and online marketing campaigns.
These initiatives are then promoted by CPA networks through affiliates.
Each time a referred visitor completes the action or offer, CPA affiliates will get a fixed fee.
How Does CPA Marketing Work?
The CPA model is a simple approach. When you break it down into how it works and who’s involved.
- Affiliate or Publisher: The influencer (blogger, brand, or business) who promotes a service or brand in order to increase traffic to an eCommerce site and achieve a specified conversion.
- Business or Advertiser: The brand that wants to work with an affiliate to provide quality traffic to the company’s website in order to increase sales, generate leads, or boost conversions.
- CPA Network: The platform that connects affiliates who want to make money by promoting products and businesses who want their products marketed.
Imagine Sophia, a popular cooking blogger, has a great number of YouTube viewers and blog readers.
She learned how to build a blog in order to make a living in the kitchen by experimenting with new recipes and promoting certain brands and items to her audience.
Her cooking audience is ready to buy the next kitchen item she suggests after she developed a guest blogging strategy, increased online traffic, and built a cult following.
Then we have our example business, Cookingpoint.
Cookingpoint creates high-quality kitchen tools ranging from cutting boards and measuring cups to professional mixers and food processors. They want to broaden their marketing reach and would love to tap into Sophia’s following of aspiring chefs.
Sophia and Cookingpoint are linked by a CPA marketing network.
Ecommerce businesses like Cookingpoint utilize CPA networks to find and partner with influencers like Lisa.
Influencers like Sophia can use CPA networks to locate companies willing to pay her to use and promote their products.
Sophia directs her audience to the company’s website, where she earns a commission on each sale or lead conversion.
Cookingpoint profited from Sophia’s referral traffic.
The network brings them together and the audience gets to try new products and learn about emerging brands. It’s a win-win.
CPA Network Terminology
CPA network terminology is simple, but there are some key terms you should know as you begin.
A person in charge of a merchant’s affiliate program. They are in charge of recruiting affiliates, interacting with them, and earning income for the merchant.
The niche which the CPA offer pertains to (sports, fashion, beauty, health, etc).
When a sale “falls through” for a previously paid-for action. Because the sale was never completed or an item was returned, the already paid commission is refunded to the advertiser’s account.
Once a successful conversion is monitored, an affiliate receives a payout (either a set rate or a percentage).
A contextual link is a text link that is put within an affiliate website and connects to the advertiser’s website.
The percentage rate at which a specific action is carried out. In other words, the total traffic is divided by the number of successful conversions.
Cost per action (CPA)
An online advertising method in which an advertiser pays for a specific action taken by a target customer.
Earnings per click (EPC)
The average commission is paid to an affiliate when a user clicks on an affiliate link.
The page on which the conversion occurs once a visitor completes the specified activity.
Return on investment (ROI)
The amount of money made by a campaign. to calculate it divide income by ad spend and multiplying the result by 100.
CPA Marketing Payment Model
The CPA affiliate marketing method is advantageous for businesses because they don’t pay unless a successful conversion is made.
The payouts differ based on competition and average commission rates in each vertical.
Skullcandy, for example, has a successful affiliate program that gives a 5% commission on sales in a competitive electronics industry.
Kelty, an outdoor camping equipment brand, offers associates up to 10% compensation on a tiered commission plan. It all depends on the competition in your industry.
The cost per action formula is a highly low-risk strategy for advertisers because they only pay for the desired actions after they occur, as opposed to sponsored traffic, which only pays to send visitors to your site through adverts.
An advertiser’s cost per action can be calculated by dividing the entire cost of the marketing campaign by the number of successful actions executed.
As an example, consider our pretend company, Cookingpoint.
If Cookingpoint spends $1,000 on a marketing campaign and receives 25 successful conversions on a recipe ebook registration form, the cost per action is $40.
While the cost per action varies by business, according to Google AdWords, the average cost per action across all industries is $48.96.
At $33.52, the automobile industry has the lowest CPA.
The highest CPA is in technology, at $133.52.
The top 10% of advertisers have CPAs that are up to five times higher than the average.
What are the Benefits of CPA Marketing?
When you target the right audience (as an affiliate) and connect with excellent influencers, CPA marketing may be quite profitable (as a business).
When compared to other eCommerce marketing channels, the cost per action formula provides several advantages, including:
CPA marketing is Easy to set up.
CPA marketing is simple to set up: all you need is a website and a CPA network.
This marketing method requires a relatively minimal initial investment.
You may start receiving traffic from affiliate sites almost immediately by using your own website and selecting a CPA deal.
CPA Pay After the Sale.
You are not paying for ineffective traffic.
Diversify your affiliates and shift your focus to a more successful influencer if an affiliate’s referrals regularly offer low-rate conversions.
CPA marketing has a Low Risk.
The risk for eCommerce businesses is low because no money is paid to the publisher unless a recommended visitor turns to a customer or completes a certain assignment.
CPA marketing has a High ROI.
Affiliate marketing makes about 16% of all online marketing.
According to CJ by Conversant’s Affiliate Customer Insights, clients spend more money when they make a purchase based on an affiliate’s suggestion.
This means that these forms of marketing strategies generate higher-quality visitors and provide a better value than most other traffic sources.
Affiliate marketing produces:
- 58% higher average customer revenue.
- 31% higher per customer order average.
- 21% higher average order value (AOV).
Expand Marketing Reach.
Scale and distribution are provided by CPA marketing.
Most business verticals employ CPA marketing, whether your brand is in fashion, technology, home and garden, pet supplies, cosmetics, or almost anything else.
Consider Bliss, a skincare and beauty product range.
Their affiliate program offers a 10% CPA reward on all sales.
Beauty influencers, bloggers, and media outlets can now effortlessly promote them, earn a 10% fee on all sales, and grow their affiliate marketing reach.
Increase brand awareness by reaching out to the affiliate’s audience, which you might not have reached otherwise.
CPA Marketing Tips
CPA affiliate marketing is not a set it and forget it strategy.
You must invest time in cultivating relationships with your CPA affiliates in order to build a solid conversion funnel and continue to improve your conversion rates.
Try the following suggestions to help you succeed with your CPA marketing strategy:
Consider hiring an Affiliate Manager.
To make the most of your CPA marketing efforts, you need a committed in-house resource — someone who can recruit new CPA affiliates, communicate with website owners, give them fresh promotions, and deliver continuous revenue to your site.
Affiliate Managers can assist affiliates by performing the following actions:
- Provides insight into strategic adjustments by reviewing affiliate offers.
- Offer advice on which types of affiliate links or advertising to utilize to optimize conversion.
- Give advice on how to create material that will effectively market the merchant’s products.
- Send CPA affiliates product updates and fresh creative.
- Provide high-performing CPA affiliates with commission bonuses and incentives.
Affiliate Managers can provide help for advertisers by taking the following actions:
- Connect you with and hire the best affiliates in your niche.
- Create innovative promotional concepts for certain products.
- Send the CPA network consistent brand messaging and product updates.
- To stay competitive, negotiate contracts with affiliates, monitor ROI, and compare your affiliate program to others.
- Assist you in developing creatives that work effectively with the best affiliate programs and websites.
- Take care of your taxes and set up your accounting services.
Avoid CPA networks with bad reviews.
The disadvantage of CPA marketing (like with another online money-making possibility) is the presence of rogue networks.
Read the reviews before joining any CPA affiliate marketing network.
Odigger provides network reviews so you can decide which networks are worth your time and which to avoid.
To see what others are saying about a network, go to the Network Reviews tab and search for the one you’re interested in.
Remember that no network will have a perfect satisfaction rating, so one or two complaints should not deter you.
The following are the most popular unfavorable review topics:
- Payment withholding (please keep in mind that even extremely respected CPA marketing networks may withhold payment for
- particular reasons, so read the network’s policies before signing up).
Affiliate managers who are unhelpful.
- Signing up for the network or using the platform is difficult.
Utilize Native Advertising.
The days of placing nasty, in-your-face advertising across your website’s header are passed.
Customers can be converted without the need for loud marketing.
Indeed, native advertisements, or those that mimic the color, style, and theme of your website, are among the marketing trends to watch in 2020.
- This year, nonsocial native spending will increase by more than 80% to $8.71 billion.
- Native placements will account for 77% of all mobile display ad expenditures spend.
- According to eMarketer, native advertising will account for over 60% of display spending in the United States in 2018.
Integrating your advertising into a high-quality web design will offer more conversions, as native ads result in two times more visual focus than banner ads.
The Top CPA Affiliate Networks
As already said, CPA affiliate networks with negative evaluations should be avoided, however there are some shining examples of respectable networks.
Platforms that offer skilled affiliate managers, a wide range of offers, and competitive payments are worth investigating.
Among the reputable CPA affiliate networks are:
MaxBounty provides trained affiliate managers who focus on the marketing requirements of a merchant.
The affiliates have been screened and provide high-quality traffic to the merchant’s website.
MaxBounty newcomers have access to a wealth of training materials, and the program pays out weekly.
Clickbooth has been in business since 2002 and focuses on making its program simple and innovative for retailers.
Joining Clickbooth as an advertiser is free of charge.
Advertisers can examine traffic results from each individual affiliate and, if desired, manage budgets, rewards, timetables, and campaigns directly or delegate the task to the Clickbooth staff.
Launched in 2009, Peerfly is a small affiliate marketing company.
It was ranked as the second-best CPA network in 2016 and made the top five for 2018.
The network offers free training for affiliates and payouts weekly, bi-weekly, or monthly through PayPal, Amazon gift cards, checks, bank wire, Payoneer, and Bitcoin.
Admitad has more than 520,000 publishers and more than 1,200 advertisers.
This network was launched in 2009 in Germany and hosts international offers, giving it a large footprint across eCommerce businesses.
Admitad boasts a client-oriented approach with personalized training and other learning options.
The network offers anti-fraud technologies, cross-device tracking, and deep linking options.
W4 reviews publisher applications before approving their accounts.
The publishers can boost their revenue by referring others to this network.
CPA Marketing Trends
Following the hottest CPA marketing trends in 2020 can boost your revenue and help you develop a strategic approach for next year’s digital marketing strategy.
- In 2020 and beyond, CPA marketing is likely to spread into emerging countries.
- CPA marketing should prioritize copy over pop-ups and headlines.
- Influencer marketing will begin to merge with CPA marketing, offering many new eCommerce enterprises even more reasons to join CPA affiliate networks.
- Ecommerce companies will shift a percentage of their marketing expenditure away from traditional channels (PPC, social media, and banner advertisements) and toward affiliate and performance marketing.
Reliable CPA affiliate marketing networks will continue to boost transparency and provide clients with data-driven information.
CPA marketing is the next stage in digital marketing for ROI-conscious companies.
It’s a fast-paced, optimization-friendly cooperation strategy that prioritizes real-world company results.
This adaptable, simple-to-implement technique also benefits affiliates, as they may select offers that reflect their own brand and website, allowing them to monetize material on their site with banners and contextual connections.
Incorporate the CPA marketing into your strategic objectives if you want to broaden the reach of your website, maintain a solid return on investment, and feel a meaningful business impact.