We established above that PPC advertising can be extremely expensive for an online advertiser to use. There is, therefore, a significant risk for any advertiser considering using the PPC advertising model for promoting their business or products online.
And, in contrast to the PPC advertising business model, which is predicated on driving high volumes of visitor traffic to an advertiser’s website, the still emerging CPA advertising business model operates on the basis that any website visitor must perform a required action before the website or blog publisher will get paid.
Thus, the first factor that should be noted about CPA advertising is that the risk is 100% borne by the website or blog publisher, and that there is accordingly no risk for the advertiser.
With the more common PPC advertising format, the advertiser will pay every time his ad is opened and viewed, but using CPA advertising means that it does not matter how many people click through from an advert to a website and then choose not to buy.
If a website visitor does not undertake the task that the advertiser has chosen to pay for, then the website owner who drove that visitor to the advertiser site does not get paid, pure and simple. For The Advertiser The primary benefit for an advertiser using CPA should therefore be immediately obvious. That is, they get what they pay for.
It is therefore equally obvious why an advertiser is likely to prefer to use CPA advertising as opposed to PPC programs like AdSense and AdWords. By using CPA, he passes the entire risk to the website owner, whilst at the same time making it a far simpler matter to quantify the effectiveness of his advertising efforts by reference to easily identifiable ROI figures.
In the most common CPA scenario, the advertiser will pay a revenue share percentage to the blog or website publisher when he or she drives a visitor to the advertiser website who then, in turn, performs the task that is required of them.
And, although the task that the advertiser requires a site visitor to perform is entirely up to them, the most common situation is where the advertiser will pay the website or blog publisher for any sales or customer leads that are generated for the advertiser’s business through the publisher site or blog.
For The Publisher For a website or blog publisher, however, CPA is not as attractive as using AdSense, for example. And, once again, the reasons for this should be relatively obvious.
Firstly, it should be evident that the financial risk that is being carried by the publisher is considerably higher when he chooses to use CPA advertising as opposed to using PPC.
If a CPA advertising campaign (over which he has little or no control, remember) is a failure, and therefore does not generate any response from the visitors that are sent to the advertiser’s website, he or she will receive no payment, irrespective of how much time and effort they might have put into promoting their site in an effort to generate visitors for an advertiser.
It can also be difficult for a publisher to effectively track the number of actions that their efforts on behalf of the advertising have actually generated, and they may be reliant on the advertiser’s own figures when they try to calculate how successful they have been.
For these reasons, it is not difficult to see why website and blog publishers have been relatively slow to encompass the CPA advertising model with the same enthusiasm with which they adopted AdSense, for example.
The bottom line, of course, for any blogger or website owner publishing any form of third-party advertising is how much money they make from it, and, so far at least, the results from CPA advertising do seem to lag a little behind those from the leading PPC programs.
Furthermore, it is also true that placing any form of third-party advertising on your website or blog that needs a site visitor to take any form of action carries the risk that the ad itself is not well designed or written, and that visitors do not therefore do what both you and the advertiser want them to do. This is true of either PPC or CPA advertising, and for this reason some publishers will be perfectly happy to try out CPA advertising as a viable alternative to PPC.
CPA is still a relatively undeveloped online advertising model, and it is probably fair to suggest that Google will have a large part to play in how the business model and therefore CPA markets develop. Without any doubt, given the size of their advertising network, when Google eventually launch their own CPA advertising model, then the chances are that the market will change almost overnight.
It is also worth noting that eBay, who are primarily in the business of contacting people and bringing them together, are now also actively promoting their own affiliate program which is based on the CPA model.
To have such a well-known brand name starting to utilize CPA advertising to promote the services of one of the world's top ten websites can obviously do little to harm the popularity that CPA offers as a way of monetizing websites and blogs.