What Is CPA-Based Web Advertising?

In the jargon-filled world of online advertising, CPA -- cost-per-action -- advertising may seem confusing at first. Also known as "pay for performance," CPA is an effective way for advertisers to select how they want to pay for their advertising -- by click, impression, sale, or other variable.

Pay-for-click advertising is very popular, but it can be costly. As such, it may be out of reach for many businesses. If you prefer to pay by sale, CPA-based advertising can deliver your customers to you and guarantee that you won't pay a dime unless until you make a sale. In the highly competitive and expensive world of Internet advertising, this is a rare bit of insurance for your company’s advertising budget.

But sales aren't the only "actions" you can choose to pay for. If you offer registrations or subscriptions on your site, a CPA-based program can be very effective. If you are simply seeking new leads for your company by using an opt-in mailing list, you can utilize CPA-based advertising to guarantee interested leads.

The benefit of CPA advertising is obvious -- you get what you pay for. And your ads will generally run in more places for longer if you decide to pay only for specified actions. This can translate to greater visibility for your company.

How it works
Now that you know what CPA-based advertising is, how does it work? When you place your ad with a CPA agency, or through a site that offers the ability to run CPA ads, your ad will begin to display as soon as it is added to the rotation.

First, you will need to decide what actions you are willing to pay for. You can use the traditional pay-per-click option, or pay by sale or by registration, whichever fits your advertising budget.

Once your ad begins to display, it will be in the rotation until the set amount of actions have transpired. If you require 100 sales from an ad campaign, your ad will display until you have reached 100 sales.

When to use CPA advertising

• Testing your ads before starting a large campaign. CPA lets you see just how many customers actually purchase your products after viewing your ad. Even if you decide to take your campaign to a CPC- or CPM-based outlet later, you can fine-tune it ahead of time by using CPA-based advertising.
• Testing an affiliate program. Since affiliate programs are essentially CPA-based advertising campaigns, you can test the waters ahead of time, without having to worry about long term affiliate arrangements.
• Poor ad performance. If you have been experiencing slow sales or a lack of response from your current advertising programs, it may be time to give CPA-based advertising a try.
• Limited advertising budget. CPA-based advertising is also an effective way of reaching new customers without having to expend unnecessary advertising resources. You will be able to set not only the action that you will pay for, but also the amount you are willing to pay for this action.

As with any ad campaign, there is no silver bullet, and no one way approach can be right for everyone. Try a number of different approaches, and keep careful track of the results. Only then will you know which ads will deliver the best return on your advertising investment.