CPA Advertising — What Advertisers Need to Know

There are many forms of mobile advertising, but not all are equally advantageous to advertisers. Not content to simply send ads out into the void with a flat rate, marketing professionals have turned to new pricing models to take their budgets further and invest in methods with proven results. CPA advertising is just one way advertisers are minimizing the risk associated with media buying.

 

What is CPA advertising?

CPA is short for Cost-Per-Action, though it is also sometimes known as cost-per-acquisition. In CPA advertising, marketers only pay if and when the ads lead to an action or sale. This is the desired end point of any campaign, but also the hardest to achieve. Therefore, this model is quite beneficial to advertisers, who transfer a large part of responsibility for campaign performance onto the publisher.

Cost-per-action is calculated by dividing the total ad spend by the total attributed conversions. The result is how much you’ll pay for each desired result. It’s similar to other forms of performance advertising in which the publisher assumes more risk and/or responsibility, such as CPV (cost-per-view) advertising, CPCV (cost-per-completed view) advertising, and CPE (cost-per-engagement) advertising, to name just a few. CPA advertising takes those concepts — only paying for a view or some form of engagement — even further, ensuring that the interaction is only considered complete with the completion of a desired event.

 

What are the pros and cons of CPA advertising?

Like any other form of advertising, cost-per-action has its benefits, but it’s not foolproof. The most obvious benefit — at least on the marketing side — is the reduced risk factor. When you’re not paying for ad placement unless that ad gets a dramatic result, your budget goes further. And if you’re not getting the desired results, you can reinvest that budget into different placements, demographics, creative, and so forth; ultimately, negative results aren’t nearly as expensive.

The downside is that not every publisher allows CPA advertising models. You may have to already have proven results to be able to use cost-per-action advertising, which isn’t helpful when you’re just starting out. It’s understandable, as CPA ads require publishers to give up valuable real estate with no guarantee of payment. It’s also not possible if the publisher doesn’t have some kind of conversion tracking tool.

 

How does CPA advertising work in real-world scenarios?

CPA Advertising

Most major digital advertising solutions now offer some form of CPA advertising, including Tapjoy. Some industries benefit more from cost-per-action than others, and rates are calculated accordingly. Tech and business-to-business ads, for example, see great results with cost-per-action ads, and as a result, demand higher rates. The auto, travel, and hospitality industries are on the lower end, with general e-commerce hovering around the middle.

But what defines an action? Well, that varies by campaign. One popular use for CPA ads is growing email databases. In this case, the action would be considered complete when the user submits a lead-capture form or signs up for regular email updates. There are also a variety of e-commerce uses, where the action is easily defined as a sale, whether that sale is a physical good, event ticket, or so forth. If the desired end result of your marketing campaign is a clearly definable action, CPA advertising is likely a fit for you.

With the right partner, CPA advertising campaigns can be wildly successful. Tapjoy makes it easy for advertisers to connect with their ideal customers and foster engagement that leads to desired actions. We have a proven track record of meaningful engagement with users, and like you, we know the value of prioritizing return on ad spend. For more information, or to get started with your own CPA campaign, contact the experts at Tapjoy.

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