What does CPA mean?
The CPA price is the amount that gets paid when an AD causes a sale (or an action). This means that a CPA advertising price can seem quite high compared to CPM or CPC. This is because conversions (sales) are quite rare comparatively. For example, you book an ad campaign on a website and agree to pay £150 CPA every time an AD leads to a sale. The website will then show an unlimited number of adverts trying to make those sales. You (as advertiser) will then report back to the website how many sales are made, and pay £150 for each of them. The website will likely show your ads after all the ads which pay on a CPM or CPC basis. It is entirely up to them how many ads they show, however. Generally, the deal will not be to make a specific amount of sales, just to try and make as many as possible. This is the most advantageous type of deal for advertisers to make in most cases. Cost per acquisition: CPA in marketing stands for cost per acquisition or action and is a type of conversion rate marketing. Cost per acquisition refers to the fee a company will pay for an advertisement that results in a sale. Target CPA is a Google Ads Smart Bidding strategy that sets bids to help get as many conversions as possible at or below the target cost per action (CPA) you set. It uses advanced machine learning to automatically optimize bids and offers auction-time bidding capabilities that tailor bids for each and every auction. The average CPA in AdWords across all industries is $48.96 for search and $75.51 for display.
|Industry||Average CPA (Search)||Average CPA (GDN)|
|Finance & Insurance||$81.93||$56.76|
|Health & Medical||$78.09||$72.58|
The equation for CPA ads is:
CPA = Ad Spend ÷ Conversions
There are two types of conversion:
- Post-click conversions– This means a user has clicked on an ad and then made a purchase/completed an action.
- Post-impression conversions– This is when a user sees the ad, and then at a later date completes a purchase/action.
In the majority of deals, the conversion does not have to happen immediately. How it works is that when the cost per acquisition ad is shown to a user it will drop a cookie on the user’s computer. This cookie then starts a countdown. If the user completes a purchase/action before the countdown finishes, then the website the ad was on gets paid. For post–impression conversions, the window is often 15 days. For post-click conversions, the window is often 30 days, although this, of course, varies from deal to deal. Of course, an advertiser may run the same ads on many sites, and it won’t pay out many times for one conversion (if the ad was seen by the same user on many sites). Only be the last site that a user clicked on, or saw an ad impression will get paid.
Average CPA rates
CPA rates are too variable to list. They will depend on the ROI of an advertiser, which will depend on the value of the conversion they are chasing. Due to this you can expect to pay/receive anywhere between £0.50 and £50!
Selling Ads On A CPA Basis
When should I be selling ads on a CPA basis?
The simple answer is: when you have spare space on your site and it’s a good advertiser. A CPA deal is generally a great deal for the advertiser, but it can work out good for you too if you have space on your site you can’t sell. Most ad networks struggle to get 100% fill rate, so if you have inventory on your site which is making little-to-no money then it can be a good idea to have a CPA campaign or two on your site. It really depends on the advertiser and your ability to optimise campaigns. In a lot of cases, if the advertiser is a big company, then it’s not exactly hurting you to show their ad on your site a lot and hopes someone buys something from it.
How do I run a CPA campaign?
The first thing to keep in mind is that with a CPA campaign, more than other types of campaign, you really are in it together with the advertiser. They want you to sell as much as possible using as few impressions as possible, which is exactly what you want. Therefore you want to set up a CPA campaign correctly from the start, and that means getting a conversion pixel in place. A conversion pixel is a piece of code you can generate from your ad server, which means that you will be able to see conversion data the same way you can see clicks in your ad server and optimise accordingly. You will need to send this to the advertiser and ask them to place it on their sales confirmation page (the webpage on their site which appears immediately after the sale has taken place). If they are unwilling to do this, then you are basically unable to optimise the campaign towards conversions, and the campaign becomes a shot in the dark (it may still be worth trying, but you should keep an eye on the eCPM, and cut it short if it’s not). You can, of course, optimise the CTR, but strangely clicks and conversions do not seem to line up in many cases. When setting up your conversion pixel, make sure that you enter the agreed-upon post-click and post-impression windows so you can optimise accordingly. If you have the ability and know-how to add pixels, add an exclusion pixel to confirmation page too so you don’t keep serving the ad to users who have already converted. It is also always useful to get reports from the advertiser. The conversions you record on your system will not line up with theirs, as some will be attributed to other websites. You, therefore, want to keep an eye on whether you are earning as much as you think you are from a campaign. It’s also nice to be able to compare yourself to other sites to see if you are actually performing well – some advertisers will provide this information, some won’t, but it doesn’t hurt to ask! As for serving the ads, this is where it gets a bit tricksy. If you are working on a post-click and post-conversion windows, what you want is to make sure that your ad is the last that is seen/clicked on by a user before they purchase. Therefore you want to try and make the ad be seen multiple times within their journey through your site. Depending on the quality of the ad, this could mean that you show the ad to a user on the first page they visit, for which it would make sense to use one of your least successful ad units (likely the skyscraper). Make sure it only appears once per session by setting a frequency cap of 1/24 hours. After that, it should appear once again before any other remnant networks you have going, and then leave it to mop up all your final unsold impressions. If you have multiple CPA campaigns running, they essentially make up a remnant network of your own – just try and set them so you always have ads from different advertisers appear together.