Definition
Online advertising payment model in which payment is based solely on qualifying actions such as sales or registrations.
Information
The actions defined in a cost-per-action agreement relate directly to some type of conversion, with sales and registrations among the most common. This does not include deals based solely on clicks, which are referred to specifically as cost-per-click or CPC.
The cost-per-action (CPA) model is at the other end of the spectrum from the cost-per-impressions model (CPM), with the cost-per-click (CPC) model somewhere in the middle. In a CPA model, the publisher is taking most of the advertising risk, as their commissions are dependent on good conversion rates from the advertiser’s creative units and Web site.
Marketers looking for cost-per-action deals have several options. Publishers with considerable excess inventory may be willing to consider nonstandard offers. Sites specializing in incentive programs are in a position to offer CPA pricing on various types of leads, although the usual caveats concerning incentivized traffic still apply. Perhaps the most widespread use of performance-based pricing is affiliate marketing, whereby merchants/advertisers determine what actions they want to reward and how much they are willing to pay.
Articles
Benchmark Your CPA
ClickZ (February 2, 2002)
CPA Is Not the Holy Grail of Marketing
ClickZ (January 12, 2001)
It’s CPA Time… or Is It?
ClickZ (January 1, 2001)
CPA – Winners and Losers
ClickZ (October 6, 2000)
Cost Per Action Ad Pricing
ClickZ (August 23, 1999)
Cost Per Action Pricing – Risks And Benefits
ClickZ (August 16, 1999)
Related Terms
conversion rate, cost-per-click (CPC), CPM, customer acquisition cost
view all terms in the Online Advertising glossary or all terms in the Digital Marketing glossary
