CPA (“CPA”, an abbreviation for the phrase Cost Per Action - “Payment for action”) is a payment model for online advertising in which only certain user actions on the advertiser’s website are paid.

CPA model- one of the most cost-effective options for paying for advertising. The advertiser pays not for clicks or impressions, the effectiveness of which is difficult to measure, but for specific consumers who have confirmed their interest in the product through targeted actions.

Interpretation of the term in the CIS countries and abroad

In the West, a slightly different interpretation of the term CPA - Cost Per Acquisition - is common. This is explained by the fact that the CPA payment model is often used when advertising online stores, for which the purchase of a product by the buyer is the action that advertisers pay for. This interpretation of the term did not take root in RuNet. Instead, an analogue abbreviation is used, CPS (Cost Per Sale) - payment for a completed sale.

Development of the CPA model in RuNet

Affiliate programs can be considered the prototype of the CPA model in RuNet. First advertising campaigns on the Internet using the CPA model were a copy of offline versions of affiliate programs: an order form was installed on the advertiser’s website, in one of the lines of which it was proposed to enter the name of the person who contributed to the purchase.

Then the mechanism of such promotions was improved and the advertiser’s partners began to receive a special personal link to the order form (“referral link”), thanks to which it was possible to track the customers referred by each partner. Referral programs of this kind are still popular in the segment of entertainment sites, online stores, MMORPGs, as well as on resources dedicated to making money online (Fig. 4).

The next stage in the development of the CPA model was its distribution as a ready-made advertising product by banner networks. This made it possible to save the advertiser from installing complex software on your website to manage the affiliate program and transfer all technical issues to the shoulders of banner network specialists.

CPA chain. How does a CPA network work?

The CPA marketing chain includes 4 links:

1. CPA network. Monitors compliance with the rules by the partner and the company, is a kind of “trusted link”, for which he receives his percentage.

3. Partner (webmaster). Attracts traffic to the company’s website by any available means (based on one’s capabilities and knowledge).

4. User (visitor, potential client). Visits the company's website through the webmaster's unique link, performs necessary actions, for which payment is made.

How does a CPA network work?

CPA network is an intermediary service between the advertiser and the performer. The webmaster logs into the CPA network, selects an offer, indicates his traffic source, starts promoting the offer, and makes a profit (Fig. 5).

Rice. 5. Example of a site with mobile offers from a CPA network

There are at least 2 links in a CPA offer: an advertiser and a partner. The advertiser’s task is to create an offer based on his needs. The partner’s task is to offer to promote and receive payment for the actions of the users he has attracted.

The CPA affiliate program requires more intellectual work and costs on the part of the webmaster (publisher). He needs to do more than just attract traffic by increasing the number of visitors to his site. He needs to care about the final action of each attracted user. And to do this, you need to take care of the quality of traffic, making it as targeted and useful as possible for a specific offer.

How does a CPA work? Pros and cons of the CPA model

When the CPA model appeared, advertisers were able to pay only for specific actions performed by users. Moreover, the action could be anything - filling out a form, subscribing to a newsletter, registering on a website, an application confirmed by a call center, etc.

To find an audience for a product, advertisers attract webmasters - people who know where to get targeted traffic from. A webmaster can be anyone - a website owner, a specialist in contextual advertising or targeting. If the traffic he attracts includes a user who performed the desired action, the webmaster receives money for this - for example, a percentage of the cost of the product.

Pros and cons of the CPA model

Advantages of the CPA model for advertisers

• Fixed costs for Internet marketing: the cost of a targeted action is clearly defined, which greatly simplifies planning.

• Placement on thematic sites without the need to negotiate, send banners and pay each owner separately.

• The ability to outsource those elements of affiliate marketing that you do not want to deal with (for example, traffic accounting and payments for complex schemes).

• In highly competitive topics (banks, cars, etc.), the cost of conversion using CPA may be lower than when working with contextual advertising or SEO.

Advantages of the CPA model for owners of thematic websites, public pages on social networks, etc.

• The most attractive opportunities for earning money are “affiliate programs” that are much more profitable than search engine advertising networks.

• The ability to switch between offers that interest your audience the most, thereby optimizing your profitability.

Disadvantages of the CPA model for advertisers

• The need to sign “paper” contracts before starting work.

• Difficulty of entry for small advertisers - networks are only interested in those partners who are willing to pay for a long time, a lot and consistently (the ideal partner is a bank, an airline).

• The need to compete with other advertisers for webmasters - to increase the size and duration of payments.

• You need to monitor unscrupulous webmasters who can bring low-quality traffic or cheat when writing cookies to increase commission payments (as a rule, CPA networks themselves monitor such unscrupulous participants).

Disadvantages of the CPA model for all partners

• Opaque contractual relations. However, for a good negotiator this can be a plus.

• Representatives of some networks are not required - failures with payments, problems with communications.

Advertisers who benefit from using the CPA model

Paying for advertising per action isn't for everyone. Firstly, we are talking only about product advertising. Secondly, the CPA model is effective for companies that use the Internet as one of their main sales channels. As a rule, websites have landing pages that are a source of calls, letters, applications, leads, and online purchases.

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Contextual advertising takes the form of a text link containing short description, close to the context of the site where it is located. Being part of the content of the page, such an ad generates more interest from the user than other types of advertising. This is evidenced by CTR indicators. You can order advertisements in the following advertising networks How Google AdWords, Yandex.Direct, Runner:

Special CPA systems, such as, for example, Admitad, Cityads.ru or Ad1.ru, can significantly increase the effectiveness of this type of advertising. Such networks not only attract advertisers, but also select relevant resources, provide assistance in preparing advertisements, etc. All that is required from the advertiser is to enter into an agreement with the network, determine the target action and indicate the price or percentage of profit, replenish the budget, load banners and wait for the clients to “fall over”.

The job of a webmaster is somewhat more complicated. He must clearly define target audience when choosing an offer, it is necessary to configure the site in the appropriate way and master the intricacies of billing. However, there are craftsmen who are able to set up the purchase of traffic from contextual advertising so that the profit from the affiliate program exceeds the advertising budget ( traffic arbitration). And now about everything in more detail:

Contextual advertising based on the CPA principle

More recently, the phrase “ contextual advertising" was most often mentioned in conjunction with "CTR". Now he has been replaced by CPA. What is the reason for such changes? CPA or Cost per Action means " cost per action».

Synonyms of this term can be considered CPL ( cost per lead - price per lead). The main goal of this type of lead generation is to collect demographic and contact data, while with classic CPA actions can be performed by anonymous users. A model that involves payment for acquisition is called Cost Per Sale or CPS (price per sale).

How are the two concepts of contextual advertising and CPA related? Everything is extremely simple - by purchasing ads, you pay for clicks (visitors). In Cost Per Action, the advertiser pays only for actions performed by users on his resource ( registration, click, purchasing a product, ordering a service, subscribing to a newsletter), and not for abstract ad impressions.

Who is CPA advertising suitable for?

The main advertisers in this area are online stores, hosting providers, banks, travel agencies, etc. Representatives of offline businesses include construction companies, auto repair shops, law firms, etc.

How to optimize costs for CPA advertising?

For example, the cost of 1 visitor is 1%, in which case the CPA will be 1 ruble/1%=100 rubles. The price of one targeted action will be 100 rubles. Now all that remains is to analyze how beneficial CPA contextual advertising is for your business.

To do this, follow these steps:

• Calculate your average bill;
• Determine the amount of profit from 1 order;
• Compare the size of your CPA with the amount of income from 1 order.

Ways to optimize contextual advertising for CPA

The first thing to do is to identify key queries and ads that are eating up your budget without provoking targeted actions. Below is an example analysis:

Ads that do not bring conversions should be disabled or the bid reduced to the minimum limit.
The second step is to find target phrases and ads that bring you sales but are above your target CPA. The example below shows how keyword has a CPA below 100 rubles:
The second and third positions need optimization. Lower your bid for unprofitable key queries, and, on the contrary, increase your bid for those with a good CPA.

So, to optimize contextual advertising for CPA you need:

• Collect statistics for each ad and key request for CPA;
• Find keywords and ads that “eat up money” and do not bring in sales and disable them;
• For key phrases and ads that generate sales with a low CPA, lower your bids, and for those that generate sales with a high CPA, increase your bids. This will ensure more traffic with a fairly high probability of conversion.

CPA traffic arbitration

To implement an arbitrage strategy in a CPA affiliate, the webmaster tries to attract cheap traffic from sources permitted by the terms of cooperation. If in the future the attracted users begin to carry out targeted actions, then the payments that the webmaster will receive will allow him not only to cover the costs of attracting traffic, but also to make good money on the difference between attracted and sold traffic (CPA arbitrage).

Practice shows that any traffic can be monetized. Some webmasters even resort to the services of professional designers to prepare advertisements:

Risks in the CPA market

The number of CPA affiliates is growing every day. The cost of entry of such networks into business has decreased significantly in last years, which allows you to launch your own network without significant investment. The systems attract webmasters with promises of high payments.

However, the network receives payment from the advertiser only after he receives the desired actions, but webmasters demand payment for the attracted traffic immediately. This scheme often leads to a cash gap and the inability of the network to fulfill its obligations in full. This is why you should trust only trusted networks.

But pitfalls can be expected not only from networks, but also from webmasters. Quite often there are situations when webmasters bring in “black” traffic, use proxy servers that assign fake data to users, and change the addresses of sites from which users came. Cookiestaffing and cookiedropping, incentivized traffic, may occur.

However, major analytical programs prevent attempts to deceive. Today, the Russian CPA advertising market is estimated at more than 3.5 billion rubles per year:

Advantages and disadvantages

The advantages of the CPA model are transparency and high quality traffic. At the same time, the advertiser can attract the target audience, saving budget. This gives CPA contextual advertising every chance of becoming the same effective tool, as well as RTB advertising. However, it also has its “cons”.

First of all, this is the quality of the audience ( even though the model attracts users who perform certain actions, they can only bring conversion once). For example, if we are talking about a promotion that those who love “freebies” will fall for.

It is also worth noting that CPA does not function well in conditions of price elasticity, taking into account only the factor of implementation of the required actions. This leads to advertisers not increasing their advertising budget at times when it is worth doing so, as the quality of traffic increases:

How to properly set up contextual advertising for arbitration?

Services such as Google AdWords, Yandex.Direct and Begun are time-tested and offer truly high-quality resources for advertising. The webmaster is required to correctly configure the context parameters and as a result he will receive a target audience interested in purchasing the goods and services offered.

Before you begin setting up your context, you should define your target audience. Some experienced craftsmen risk experimenting in this matter. In some cases, this technique works. However, novice optimizers should not do this. They should carefully study the main aspects and only then start looking for new audiences. In order to competently create advertising campaigns, it would be a good idea to study instructions and guides on how to correctly buy contextual advertising on Google or Yandex.

Considering the fact that contextual advertising is rightfully considered the fastest, within a few days your ads will be visible to millions of users. You will have the opportunity to promote your offers on popular resources. However, it is worth recalling that context also refers to one of the most expensive types of advertising. Therefore, an arbitrageur will need a couple of hundred dollars to launch several advertising campaigns.

conclusions

In order to start making money on arbitrage, first study the theory well, prepare a small starting capital and start acting. Do not forget that CPA traffic arbitrage is a risky business and you can “drain” all your capital without making a profit. But even if this happens, don't stop. Consider failure as experience that can be useful when launching the next possibly more successful advertising campaign.