Compared with regular PPC marketing, CPA is much more goal-oriented and gives you a way to calculate the ROI from each and every click. This makes a lot of sense if the page you're sending your viewers to is one where they can buy products. They will click on the link and from there they might buy your product, sign up for your service or otherwise spend some money with you. CPA also makes a lot of sense when you have another clear target in mind. The other obvious example here is getting people to sign up to a mailing list. In this scenario, CPA makes a lot of sense because again you're paying for that goal that you hope to achieve.
While you won't profit in the short term from people signing up to your list, you should be able to monetize those e-mails later and thereby you'll be able to eventually get your returns. It's a long process but the end result should be the same. But there are situations where CPA doesn't make as much sense or isn't as important. For instance, sometimes advertising will be used simply to increase awareness of a product or a brand and in that case, the target can't really be measured. If you think of the advertising that you will often see on TV, then a lot of it won't have any clear 'call to action' at the end. In other words, they don't tell you how much the product costs, or where to buy it… they just make it look good. The idea here is to create a positive association and/or awareness for a product in your mind.
Then, when you are out shopping and you see that chocolate bar/detergent/toothpaste, the hope is that you'll be slightly more likely to pick it up. Increasing brand awareness has much more value than that though and will continue to reward the companies that invest in that marketing for years or decades to come. If your objective is similar – simply to get people to know the name of your business – then CPA might not be the best choice. That is simply because you can't directly measure how 'aware' someone has become of a brand, or how impressed they've been by an advert.
It's worth noting though, that in order to make a brand a household name through conventional advertising, you would need to sink a huge amount of money into your campaign. This is likely more of an investment than most small businesses could afford. CPA marketing, on the other hand, is suitable for smaller businesses because you will know that you're making direct returns on all your advertising, thus reducing the amount of time until you break even. That said, the more money you can invest in your marketing, the more accurate the data describing your CPA will be. Remember, this is based on averages.
CPA vs Affiliate Marketing The savvy internet marketer reading all this may have noticed that CPA actually has a similarity with another type of promotion: affiliate marketing. Indeed, CPA is somewhat the missing link between PPC and affiliate marketing and has many of the advantages presented by each. Affiliate marketing is basically the process of paying commission to marketers that promote your product. So say you have an online course that you're promoting or an ebook. With affiliate marketing, you could give out special URLs to marketers that they can use to refer sales to you. From here, you would then automatically give them a percentage of every sale they brought in. If they were to earn you five sales, then you would pay them something between 40-60% for each of those sales (the higher the percentage, the more people will likely work to drive leads your way). Likewise, you can also use affiliate marketing to pay people for generating leads on your behalf. Affiliate marketing then is, in fact, a form of CPA – because you're only paying out each time someone actually makes you a sale or a lead. Again, you are paying per action or per lead.
There are subtle differences between traditional forms of CPA and affiliate marketing but we will consider both options throughout this guide. As a general rule though, affiliate marketing tends to mean giving away a larger cut of your profits but for a more guaranteed and steady ROI. It also gives the affiliate markers the freedom to promote your product as they see fit, as opposed to publishing an advert that you designed.
Generally, affiliate marketing works better for higher ticket items and for companies that are less concerned about presenting a particular image.
There are a lot of options to play around with here and finding the right system is one of the most important steps in ensuring that your campaign is successful. That's what we'll be looking at in the following chapter…