In previous articles, we have already discussed the advantages of CPM and CPC pricing models. Now it’s to talk about the last, but not least, CPA pricing model. We hope that by this moment you’ve been actively launching CPA campaigns for a long time and creaming profit off the top of them. But have you ever wondered what CPA marketing is in general? Who uses the CPA method, how and why?
First of all, let's look at the players in the CPA market. There are more of them than you might think at first glance. And some of them you might not even know existed. So, let's go.
Direct advertisers are usually business representatives. Business can belong either directly to the production of goods or the provision of services, or their further distribution and sale. Direct advertisers are the very first link in the chain of launching online advertising. They are the advertising customers, hoping to get new leads and further sales of their goods.
Depending on the goal, offer, and budget, direct advertisers can choose from two product promotion options: entrust the entire process to a professional manager, or engage in advertising independently, for example, through our Self-Service Platform or another ad manager.
However, more often for such services, direct advertisers turn to more competent intermediaries, who will be able to promote their offer more effectively. Of course, the contractor will receive a certain income in the form of a commission. Next, we will look in detail at who uses which methods to advertise the received offer on the CPA digital advertising market.
CPA or Affiliate Networks
These are not to be confused with advertising networks. We will also talk about the latter, but a little later.
The main function of affiliate networks is to collect a large number of offers from direct advertisers and search for contractor affiliates. The affiliates, in turn, look for websites where to later place the ads via the CPA pricing model.
Thus, the seller or producer of the product (aka direct advertiser) can initially not burden themselves with finding where to buy traffic and gives the offer to the partner network. After collecting several offers, the intermediaries themselves will find a publisher or advertising network that will launch advertising on these offers. And the affiliate network, of course, will receive a monetary commission from this.
Individual Affiliates and Affiliate Teams
As you can see from the title, it can be either one person, a whole team, or even a large company. Affiliates are also called media buyers, simply because they don't have their own traffic. Affiliates are another type of professional intermediaries between advertisers and publishers. Moreover, other participants often appear in this chain.
Offers for advertising affiliates typically receive in CPA networks, which were discussed in the previous text section. To find a place for publishing an ad, one already needs to contact an advertising network. Decent networks have their own bases of trusted publishers. At Galaksion, we take this very seriously, so we buy exclusively clean traffic directly from webmasters, despite the fact that in our market, most of the traffic is still resold and is not of the highest quality.
If such cooperation is based on the CPA pricing model, in this case, the affiliate will receive a monetary commission from each conversion.
Or, as they are also called, ad networks. Our company is one of them. Affiliates or direct advertisers (personally or through an advertising agency) come to an Ad Network with their offer, which they want to advertise on the Internet.
The ad network cooperates with webmasters. The latter own websites with content on a variety of topics. Each of these websites has some advertising units. There, the advertiser (i.e. an affiliate or direct advertiser) places an ad and begins to receive traffic consisting of site visitors.
Previously, most advertising networks sold traffic using CPC and CPM pricing models only. Thus, at this stage, the chain of work on the CPA pricing model for advertisers used to come to an end. Here, affiliates had the risk of large monetary losses, because the traffic purchased by CPC or CPM costs something, but does not guarantee conversions. And conversions are what makes the affiliate profit in the CPA marketing scheme. What should one do?
CPA pricing model
We at Galaksion understand that modern time requires modern decisions, here meaning working with the CPA model. Just in case, let's go through the basics once again.
CPA is an abbreviation that stands for ‘cost per action’ or the price of a single targeted user action. What exactly this action will be is decided during the launch of the advertising campaign. This can be going to a website, subscribing to a newsletter, installing an app, registering, topping up your balance, purchasing a product, or just putting it in a shopping cart in an online store, and many more.
The CPA metric itself is calculated by the formula:
CPA = Total Ad Spend / Total Conversions
Let's calculate the CPA in an example: if during the campaign a budget of $300 was spent and 120 conversions were received, this means that one user's target action cost the advertiser $2.5.
In addition, we will deal with a couple of important concepts that are important not to be confused with each other:
CPA is an actual payment model in which the advertiser pays only for conversions. Clicks and impressions here can be obtained virtually for free while increasing brand awareness and its web presence.
Finally, the CPA rate is the amount of the bid that you are willing to spend on a single conversion. By the way, on our SSP platform for advertisers, you can always find recommended rates, if you are not completely sure whether this or that rate will bring conversions.
We strongly recommend that all our partners run ads using CPA. There is a reason for this and it is very simple. Paying only for conversions is profitable with any mainstream offer from the top verticals: e-commerce, utilities, nutra, apps, extensions, sweepstakes, games, vpn, dating, finance, music and movie-related offers.
And finally: how do you get the most conversions out of your favorite CPA campaigns? To increase the ROI and profit when working via CPA, it is enough not to forget about the most basic and at the same time vital rules:
— Create more test campaigns for different bundles. Here is the time to take advantage of our free creatives base, which has already proven its effectiveness. Try different options and evaluate the results.
— More traffic — more conversions. Try setting different CPA rates, analyze your ROI and choose the rate that gets you the maximum amount of high-quality traffic.
— Optimization is everything. It is not always possible to choose a favorable combination of settings on the first try. Analyze statistics, add no-conversion zones to black lists, create individual campaigns for white lists.
And, of course, be sure to communicate with Galaksion managers. They are always ready to share professional secrets that they have accumulated over the years on the other side of the advertising platform.
Everything looks much more clear now, right? Keep all the recommendations in mind and start launching CPA campaigns on our Self-Service platform for advertisers!