CPA marketing is a type of affiliate marketing that businesses use to promote their products. It’s when you delegate a professional to advertise your product, paying a fixed price for every target action from your audience. These actions are called conversions. Typical types of conversions are signups, downloads, opt-ins, and purchases.
Cost-per-action implies that an advertiser/brand owner only pays when their affiliates’ efforts lead to conversions. This article will explain how CPA marketing works.
What is CPA marketing?
It is a marketing strategy wherein a business finds an affiliate who will promote their products to get conversions. Cost-per-action implies that the business only pays the promoter when a user takes the suggested action, e.g., buying an item, watching a video, filling out a form, or signing up for a newsletter.
How does CPA marketing work?
The process involves three main actors:
- The business or advertiser that owns the product to be advertised.
- The affiliate (also: publisher) that promotes the product to the business’s target audience.
- The CPA network that connects the business and the affiliate marketer.
Let’s say there’s a popular online game named “World of Lovecraft”, and its developer wants to enter a new market in Canada. The developer doesn’t know how to appeal to the Canadian audience, how much ads cost here, and how local competitors promote their games. What the developer does is find a CPA network hosting hundreds of marketers and places an offer on the network. The offer describes the game, its target audience, and what exactly the developer needs: get new players who will register and start a 7-day trial. Here, we have a conversion type — trials.
An affiliate marketer, Jonah, is a passionate gamer. One day, he finds a new offer from his favorite brand in his CPA network. He’s well-skilled in buying traffic from Canada, so he enters this CPA game.
Jonah gets a unique affiliate link from his network and then plans how to send as much quality traffic as possible. He decided to buy PPC ads from Google and some Banner ads from a reputable network named Adsterra. Jonah’s strategy sparks as he gets paid $2,000 for sending 1,000 trials for $2 each.
*We took random figures here, of course.
The above example demonstrates how CPA marketing works.
Joining Adsterra CPA Network as an affiliate marketer puts you a few seconds away from lucrative VPN, Utility, and Sweepstake Offers. Join now and connect with reputable advertisers.
To Contents ↑CPA network terms
Important CPA network terminologies include:
- Commission: The percentage of a sale the affiliate receives for their referral.
- Conversion rate: The percentage of users that take the affiliate’s suggested action.
- Chargeback: The amount deducted when a sale falls through, e.g., the buyer requests a refund.
- Cookies: Text files with small pieces of data that advertisers use to track affiliate referrals. Cookies assign each web page visitor a unique identifier and track if they take the affiliate’s suggested action.
- Cost per action (CPA): The amount the advertiser agrees to pay the affiliate for each action they refer.
- Earnings per click (EPC): The amount the affiliate earns each time someone clicks on their links.
- Return on Investment (ROI): The profit an advertiser generates from their CPA marketing campaign.
How do you calculate CPA?
The CPA marketing formula is simple: the total advertising spend over a specific period/total number of conversions. For example, if you spend $100 on ads and receive 5 conversions, your CPA is 100/5 = $20.
Categories of CPA marketing
There are three main categories of CPA marketing: pay-per-sale, pay-per-action, and recurring payments.
Pay-per-sale
In this case, the advertiser pays the affiliate a percentage of each sale they generate. The affiliate only gets a commission if they generate a sale.
For example, an iGaming platform places an offer on a CPA network, suggesting a $200 payout for every deposit from new subscribers. An affiliate sees the offer and signs up. They convince users to sign up on the iGaming platform and claim the $200 reward for every deposit they drive. Here, the deposit is the conversion.
Pay-per-action
Here, the publisher gets a commission when they generate a specific action for the advertiser. The action could be a website visit, newsletter signup, filling out a contact form, booking a reservation, etc.
Recurring payments
Affiliate programs usually offer a one-time commission for each sale a publisher generates. However, this model offers the publisher recurring commissions if their referred customer makes repeat purchases.
Revenue Share
Revenue share “RevShare” is a model whereby the advertiser shares a percentage of the revenue with the affiliate. Commissions can range from 1% to 75%, or even 90% on some platforms. Commission is calculated based on a customer’s initial purchase plus any upsell they might pay for.
Advantages of CPA marketing
The benefits of this type of marketing for advertisers include:
1. It’s easy to set up
The process of setting up a CPA marketing program is noticeably easy. As an affiliate, you just need to have a pool of traffic sources and a good CPA network to join.
Similarly, advertisers only need to find a suitable CPA network to join, and they can easily find high-quality affiliate partners.
2. No upfront payment
Advertisers don’t need to pay marketers upfront, unlike other forms of marketing. They only pay when the affiliate generates a conversion; this model strictly aligns the interest of the affiliate and advertiser. In most CPA networks, the payment is made only after the advertiser approves the conversion.
3. Higher ROI
CPA marketing generates a higher return on investment because advertisers only pay when the affiliate generates a conversion. This way, they avoid wasting money on digital campaigns that might not even generate conversions in the first place.
The benefits of CPA marketing for affiliates include:
1. High payouts
Affiliates can earn significant revenue by playing their cards right with CPA marketing. CPA ads make much more than typical display ads.
2. Flexibility
You can easily scale your CPA marketing campaigns as traffic on your website or blog increases. There’s little complexity involved; just continue creating good content and attracting users, and you’ll earn higher sales as your traffic grows.
3. Higher conversion rates
CPA campaigns have higher conversion rates than other types of advertising. This happens because you’re marketing products relevant to your audience, unlike display ads that can be chosen randomly for a website.
Consider the below case study of an Australian dating website that earned a 317% return on investment (ROI) from Social Bar ads on the Adsterra CPA Network:
Best practices of CPA marketing
Track your campaign performance
Advertisers can’t just deploy a campaign and call it a day. They must constantly monitor the campaign to ensure it’s delivering the expected conversions. If not, it’s a signal to change the campaign settings.
The same considerations apply to affiliates. They must track their campaigns to see if they’re delivering the intended results and make changes if necessary.
To Contents ↑Avoid unreliable CPA networks
Avoid any CPA network with a bad reputation. Check reviews and third-party opinions before choosing any network.
Choosing a shady CPA platform means both the advertiser and affiliate would waste their time and money.
To Contents ↑Beware of fraudulent offers
Affiliates must avoid promoting poor-quality products, e.g., get-rich-quick schemes, illegal gambling and trading, illegal medications, etc. Promoting such schemes can hamper your reputation and cause legal consequences.
Similarly, advertisers should beware of click fraud. Shady affiliate marketers can use bots to generate fake conversions, so always check for unusual patterns, e.g., getting a lot of traffic and little to no conversions.
To Contents ↑Tips for CPA marketing
- Affiliates should design an appealing landing page to hook the viewer’s attention. The page should contain clear information about the product you are selling.
- Affiliates must collaborate with advertisers relevant to their target audience and vice versa. There’s no need for any collaboration where the audience doesn’t align.
- Advertisers can hire a knowledgeable affiliate manager who has experience in managing campaigns. This advice mainly applies to first-time advertisers with little experience in CPA campaigns. An affiliate manager can guide you through the process and ensure you don’t make unnecessary mistakes.
Top CPA networks for affiliates
The best CPA networks include:
Adsterra CPA Network
Adsterra is best known as a display advertising network but also runs one of the best CPA networks. This network only works with reputed advertisers with high-quality offers. It offers bi-weekly payouts to affiliates, which is faster than most networks offer.
Adsterra CPA provides high-quality support to all partners. Every affiliate has access to 24/7 expert support and can ask Adsterra’s staff any relevant questions they have.
The top niches for this network include Antivirus, Utility, iGaming, Games, VPN, Software, Dating, and Sweepstakes. Adsterra gives bi-weekly payouts after verifying your traffic. But, trusted affiliates with large, quality traffic can get paid twice weekly.
Adsterra makes affiliate marketing as seamless as possible for both affiliate marketers and advertisers. We guide webmasters in maximizing their revenue.
To Contents ↑MaxBounty
MaxBounty is one of the oldest affiliate networks, having launched in 2004. Affiliates can sign up and choose from over 3,000 campaigns from reputable advertisers. Affiliates receive payments every week to replenish their budgets. You can monitor affiliate earnings from an interactive dashboard.
To Contents ↑CPAlead
CPAlead is a CPA network that focuses on app installations. Affiliates can sign up and choose apps to advertise to their audience; you’ll get paid for each app install you generate. Affiliates can receive their payments every 24 hours.
Similarly, app developers can join CPAlead and find expert affiliate partners to work with. CPAlead works with some of the biggest brands, such as Amazon, Spotify, Rovio, JPMorgan Chase, and Samsung.
To Contents ↑CPA marketing — FAQs
CPA marketing is a subdivision of affiliate marketing. In CPA marketing, the affiliate marketer is paid for each action, while typical affiliate marketing pays per sale. In CPA marketing, the action could be a newsletter signup, app download, event booking, etc. However, affiliate marketing only pays a commission when the marketer’s campaign generates a sale.
The three main players in CPA marketing are the advertisers, affiliates, and users. The advertiser is the brand with a product or service it wants to promote. The affiliate is the professional who runs ad campaigns on the brand’s behalf. The user is the target audience that takes the relevant action the brand wants.
Yes, cost per action marketing is a lucrative way to earn income if you can drive high-quality traffic to your advertisements and convert it into actions. You can test different marketing strategies and get paid for driving actions for businesses, e.g., newsletter signups, quote requests, app downloads, etc. CPA marketing is very much worth it if you play your cards right.
In 2024, expect a noticeable increase in the use of AI tools to streamline and improve CPA affiliate marketing. AI tools can automate significant parts of the CPA marketing process, including suggesting the correct target audience and ad slots to bring maximal results. It frees up time that affiliate marketers can channel elsewhere.
The best method of CPA marketing depends on what you’re expert in. Many pros will consider buying traffic as the most promising method. Getting traffic this way is easier than building a website, writing frequent content, and waiting till you amass significant viewership before starting CPA marketing.
None is inherently better; it depends on what you want as an advertiser. If you’re chasing e-commerce sales, traditional affiliate marketing is better because you only pay commissions when you make a sale. But, if you’re chasing other conversions such as downloads, sign-ups, and free trials, CPA marketing is the better option.
There’s no specific amount you can make from CPA marketing. It depends on many factors, including your niche, audience size, type of content, type of advertisers, etc. The good news is that there’s no limit; you can earn as much as possible if you play your cards correctly.
Take, for example, this content creator who earned $4000 by advertising iGaming CPA offers on their website:
Conclusion
We have explained cost-per-action marketing in detail. We’ve explained how it works, its benefits, and best practices. We also provided cost-per-action marketing tips for advertisers and affiliates.
The most important part of CPA marketing is choosing the right network. No matter how skilled and experienced you are, choosing the wrong platform will make your efforts futile. The good news is that Adsterra CPA is one of the best networks you can join in a few steps and find offers from trusted advertisers.
