A Definition of Cost Per Action Advertising

Monday, October 8th, 2007

Cost per action (CPA) is an internet marketing method whereby the advertisers is only charged when an action of their choosing happens after an end user clicks on their ad.

In traditional pay per click or pay per impression advertising, the advertiser pays regardless of whether the desired action on their site occurs.

The action can be a sale via an e-commerce enabled website, an e-mail sign up for a newsletter or the completion of an on line survey, in fact the action can be whatever outcome the advertiser desires.

The action is matched back to the original click via an event driven script. An example of this could be a script which contacts Google with a click ID number once an end user has completed a shopping cart check out and the credit card authorisation is done. This is usually know as the thank you page.

Because the advertiser has much more control in the outcome, they are more inclined to pay a premium for this type of advertising. If they know they will make $100 through the download and sale of a software title, they will be happy to pay a 20% commission because they know their end goal has been met.

In a wider click fraud context, CPA creates an environment where fraudulent clicks are far less likely to occur. Automated credit card payments are more difficult to process via click bots or on click farms, but the larger revenues to be gain will soon enticed technically proficient teams of organised fraudsters to enter this arena.

Tags: CPM
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