Cost per Action (CPA)
What is Cost per Action (CPA)?
CPA (Cost per Action) is a way to for advertisers to measure how much money needs to be spent to result in an action. These actions tend to be sales or sign-ups. Advertisers can buy their ads on a CPA basis, meaning the publisher only gets paid if the displayed ads actually result into actions.
What about Cost per Acquisition?
CPA is sometimes also called Cost per Acquisition, the average advertising cost needed to acquire a new customer. As acquiring a customer can be considered an action, you can treat CPA as either Cost per Action or Cost per Acquisition, when it comes to acquiring new customers.
Why is CPA important?
CPA is important to advertisers, as it allows them to:
- Measure if their advertising campaign has a good return on investment. If the CPA is higher than the business generated from a sale or sign-up, it might be a good idea to change their advertising strategy.
- Allows an advertiser to bid for the (maxium) amount they are willing to pay, for a given action. This gives the advertiser more control over their marketing costs.
CPA is just one way to purchase/bid for advertising. CPM and CPC are the other most popular ways to do this: