When a web user clicks on an online ad and performs a certain action or purchase, money exchanges hands between the advertiser and the owner of the space where the ad was published. Cost Per Action advertising is a concept that determines the terms of payment between these two parties.
The Internet has drastically changed the world of advertising over the last few years, and this has led to several new advertising methods and concepts being incorporated by companies. A majority of the population has Internet access today, and this has given advertisers a huge target market that they can work towards, and the underlying concept of the Internet with regard to this is that a consumer can see various websites at a very rapid pace and jump from one page to the other with a single click. This gives advertisers great opportunities to utilize the space on these websites, and this has inadvertently led to the birth of several new advertising concepts.
What is Cost Per Action Advertising
Also known as CPA, it is a mode of advertising that comes into play in the online advertising world. To understand this, let us take the example of a content generation website. Advertisers are permitted to place their ads on relevant pages as and when they like, but they will pay the owner of that space for the ads only when a user actually clicks on the ad, or performs a certain predesignated action. This action is determined by the agreement that the two parties hold, and it could range from simply clicking on a page, to submitting certain data and filling up certain forms.
Thus the advertiser pays money only when users actually perform a certain action that leads them to the advertiser himself. This is a more advanced version of the Pay Per Click (PPC) revenue method that Google popularized. Within CPA, the user is not only required to click on the ad, but perform some other action as well before the advertiser pays his money to the owner of the space from where the user came. In some cases, simply clicking on the ad will be enough for the advertiser to pay up, but in some other cases the advertiser will not pay until the user actually purchases something, opens another link or fills up a form and submits some of his details.
Why Choose CPA Advertising
The reason why this method has become so popular is because it has improved the efficiency of many online ads. Since the advertiser only pays when there is an actual conversion of a lead into a sale (or any other agreeable action), the advertiser has definitely benefited from the user seeing the ad. Online advertising payment methods have evolved a lot over the years, and Pay Per Click was the first step in this process. Advertisers soon found that many Internet space owners misused this concept and actually clicked on their own ads sometimes, so as to generate more revenue.
In order to counter this, CPA was introduced and no one can say that it has not been effective. Along with the usual advantages of online advertising, this method has also brought down costs for online advertisers, and this has in turn led to a greater Return on Investment (ROI) for them. Even though online advertising is far more economical than mass media advertising, Over The Line advertising (OTL) and Out of Home advertising (OOH), advertisers will always look for ways to lower costs and improve ROI for themselves. This concept also enables them to plan their advertising campaigns in a more effective manner, and thus plan their expenditure and outlay for the entire process. Since CPA advertising directly leads to the acquisition of a new customer, or at the very least a new lead, it is also sometimes referred to as Cost Per Acquisition advertising.
Since there are always two sides to any concept, it is also true that publishers do not like CPA advertising. Advertisers benefit from this method immensely, but publishers find the method to be wasteful and time-consuming. After all, they would prefer to get paid as often as possible, and this is why a Pay Per Click revenue model suits them the best. There is no guarantee that if a user clicks on an ad he will complete the designated action, so a publisher will always have a distaste for this method. There is a balance that publishers and advertisers need to find, and this can only be achieved with the help of cooperation.
At the end of the day, CPA advertising has changed the world of online advertising. Over time this concept will also be morphed into something newer, but as of now, this is the preferred payment model for almost all online advertisers universally.