CPA is an acronym or short for Cost Per Action or Cost Per Acquisition. The term CPA is not new. If you browse through the Search Engines using the keyword phrase "cost per action" or "cost per acquisition" you will find numerous websites with CPA related articles dating from 2001 - over 5 years ago.
In a nutshell, CPA is a performance based online advertising payment system in which payment is based solely on qualifying actions such as a lead, a sale or registration. In other words, merchants/advertisers determine what actions they want to reward and how much they are willing to pay for those actions.
Lead, Conversion or Registration
The actions defined in a CPA or Cost Per Action agreement relate directly to some type of conversion, with leads, sales and registrations among the most common and does not include deals based solely on clicks such as AdSense, which are referred to specifically as cost-per-click or CPC.
The definition of a Lead, Conversion or Registration can vary from one CPA Affiliate Network to another.
A lead or conversion may simply be considered to be no more than a website visitor providing his/her name and eMail address.
In another example, to be considered a lead or conversion, a website visitor may need to complete and submit a 1 page or 2 page application form. In this example, the product in question may be a home loan or payday loan. But it does not matter to the publisher whether the applicant gets the loan or not or has to wait 30 days before they get an answer from the lender. Once the visitor has completed the desired or contractual action, the publisher has earned a commission.
In another example, a lead or conversion may simply be achieved by a website visitor completing a small website form and paying a small $postage fee via a credit card for the advertised product to be sent to their mailing address.
What all this means is that publishers i.e. website owners, get paid not on how many times an ad is seen or even on how many times it's clicked, but according to how many people click on it and take the action specified by the advertiser on his/her site.
Comparison of CPA Affiliate Programs with Cost Per Click or Cost Per Sale Website Monetization Models
CPA Affiliate Programs are very similar to other popular website monetization models whereby a publisher takes advantage of the arbitrage opportunities between low cost traffic and high paying contextual ads or products paying high affiliate commissions.
In one Scenario low cost pay-per-click or other traffic is driven to a website or landing page displaying high paying contextual ads. When someone clicks on the low cost pay-per-click ad, they then get referred to the website or landing page. If that same someone then clicks on a high paying contextual ad, the publisher earns a commission.
In another Scenario low cost pay-per-click or other traffic is driven to a website advertising high paying affiliate products or directly to the advertiser's own website. When someone clicks on the low cost ad, they then get referred to the Product page(s). If that same someone then orders and pays for a product the publisher will have earned an affiliate commission.
The subtle difference between the first scenario and the second scenario is that in scenario 1 the publisher gets paid with a % of the value of the click regardless of whether the visitor purchased the end product or not. In scenario 2 the publisher only gets paid if the click resulted in a Sale. In CPA (Cost-Per-Action) Affiliate Programs the publisher gets paid if the click resulted in a lead.
CPA Affiliate Network
Before you can engage in a CPA Affiliate Program you will need to apply for affiliate membership in one or more of the 50+ CPA Affiliated Network Companies. All applications are stringently reviewed before they are approved.
Once your application is approved there are essentially 7 simple steps to start generating profits:
1. Find the ultimate high paying, high quality CPA Campaigns to advertise;
2. Identify appropriate Keywords;
3. Register your Domain, prepare and upload your Landing Page;
4. Set up super Low Cost P-P-C Advertising Test campaigns;
5. Monitor and Identify Profitable Test campaigns;
6. Turn Profitable Test Campaigns into fully-fledged Campaigns;
7. Rinse and Repeat;
CPA Affiliate Programs can work well with any type of advertising or traffic generation but are especially extremely profitable when undertaken with a pay-per-click advertising program.
Caution - CPA Affiliate Programs are very profitable and are currently fashionable. All Internet marketers should start looking at CPA Affiliate Programs but before they engage in this activity they should make sure that they have read and fully understand pay-per-click advertising.
About the author: Stephen S Alison is a retired "bean counter" who spent 26 years in middle management positions for major US financial institutions in Europe and a further 10 years as an adviser/consultant to a number of European financial institutions. He owns and operates a number of "hand built" niche websites including: http://www.1clickflipping.com and CPA Affiliate Programs