CPA Explained – Why Using CPA Networks Is A ‘Win-Win’ For Advertisers And Publishers
We’ve established that the quickest and most precise way of getting from ‘Point A to Point B’ when executing Internet Marketing is by using PPC advertising. But if not done properly, it can become an extremely expensive and time consuming task. This is because you are required to practice, test and tweak ‘online and live’. You have to test your PPC ads using real money on real search engines to see if they convert or not. So there is a significant risk for any new advertiser considering using PPC advertising for promoting affiliate products, CPA programs or their own business, service or products.
In addition to poorly written ads, the advertiser for any PPC campaign has to fight against the dreaded ‘Click Fraud’, where some estimate can occur up to 20% of the time. So 1 out of 5 clicks can be complete duds, regardless of how good your ad or product is. This obviously is a crucial killer to your CTR (Click Thru Rate).
Introducing The CPA Business Model
Advantage For The CPA (Cost Per Action) Advertiser
In a common CPA business scenario, the CPA advertiser will pay a specified ‘share’ percentage to the website publisher, only when they accurately drive a qualified visitor to their website landing page. This ‘qualified’ visitor, who then, in turn, has performed the required task, will only be paid. This task can involve filling out a simple form, a detailed questionnaire, or submit info such as a mailing address for a ‘Free Trial’ to try out a promotional product.
Although the required ‘action’ the CPA advertiser needs a visitor to perform is entirely up to them, the advertiser will only pay the website publisher for just the customer ‘leads’, that are generated for the advertiser through the website publishers site or advertising efforts.
This is generally a ‘Win-Win’ situation as the CPA advertiser only pays for qualified customers and the publisher can earn substantial income for simply sending visitors to a pre-made landing page.
Why CPA Works For The Publisher
There are however some precautions, the most obvious being the financial risk that is carried by the CPA publisher, especially if they choose to use the CPA model and combine it with Pay Per Click advertising. If the CPA advertising campaign is a failure, meaning the ad campaign does not generate response from the visitors that are sent to the CPA advertiser’s landing page, he or she will still be charged with the PPC costs, but will not receive any payment from the CPA advertiser. This irregardless of how much time and effort they put into promoting the CPA program, all for the benefit of generating targeted visitors for the advertiser.
It can also at times be difficult for the CPA publisher to immediately and effectively track the exact number of visitor ‘actions’ that their marketing efforts has resulted in, in regards to how much their advertising dollars has actually generated into actual CPA conversions. The publisher in most cases are only reliant on the CPA advertiser’s exclusive figures when they try to track how successful their advertising ratios have been.
The end result of course is that for any website owner, publishing any type of third-party CPA advertising is determined on how ‘skilled’ they are, as well as how much money, time and effort they invest.
In addition to placing CPA advertisements on their websites that requires a site visitor to take any type of action, it also carries the risk that the ‘ad’ may not be very well designed. The ‘ad’ being either the CPA’s Landing Page or Advertisers PPC ads. It is often difficult to pinpoint who is at fault, where the source of the poor results stem from, is it the website publisher or the CPA advertiser. The end result being a lot of testing is required to determine why the promotion failed. What is the reason why the visitor does not perform what you or the CPA advertiser wants them to do.
CPA at this point is still in the developmental stages as an ‘perfected’ online advertising model. As this process matures, it is quite obvious to suggest that Google and its other Search Engine brothers will soon actively play a large part in how this CPA business market develops.
But without a doubt, given the size and revenue generated by these various CPA advertising networks, its not an ‘if’ but a ‘when’ Google will eventually launch their own interpretation of a CPA advertising model, then the market will convert and change almost overnight.
eBay, who’s primarily business is connecting people and bringing them together, has also recently started to actively promote their own CPA based affiliate program. To have such a prominent ‘brand name’ starting to utilize their own CPA advertising vehicle to promote their services, it is quite obviously that the CPA model is an excellent way to monetizing websites and generating income, if done properly.