Why is a CPA important?
CPA advertising is often used when companies are doing affiliate marketing on external websites, blogs, or social media. When companies engage in advertising that results in a certain amount of money for each ad clicked, this is called cost-per-click (or CPC) advertising. The payout rate is much lower than CPA ads. Both types of advertising are considered performance-based advertising because the performance of the reader or viewer determines the amount paid.
When agreeing a CPA advertising agreement, the company and the ad publisher will need to agree on the amount paid for each acquisition or action completed. This type of arrangement typically poses the greatest risk to the ad publisher because it relies on their ability to attract consumers and motivate them towards action. However, CPA ads can appeal to publishers who have extra ad space to fill that might otherwise go unused.
For an advertiser, CPA ads involve lower risk because they don’t have to pay for print ads but don’t result in a conversion. In contrast, CPC ads can be vulnerable to click fraud, where ads are fraudulently clicked to boost ad revenue.