Why (or why not) use CPA?

CPA (Cost Per Action) is when the publisher of the ad is only paid when the user clicks on the ad and preforms the desired action by the advertiser, which can be anything from purchasing a products to filling out a sign up to a newsletter. CPA ensures that the advertiser get the visitor to their final destination, whereas CPC only ensures that the visitor clicks on the ad. This means that CPA conversion rates will be much less than CPC conversion rates. In this manner CPA advertising is quite beneficial to advertisers because they are guaranteed that a visitor will end at their goal, otherwise no money is paid to the publisher.

With CPA advertising using Google’s Adsense (it is referred to as Referrals), you can actually choose which ads you want to be shown on your website. This means that you are able to select ads that are relevant to your visitors and pick the ones with the highest CPA values. CPA rates range from $0.01 to $153.85. CPA looks like it could be a much better choice than CPC because the higher revenue value and the ability to select what ads you show on your site; however, how much money will you really make with it?

Let’s say that your CTR (Click Through Rate) is ~5% for targeted ad on your website and that your CPC rate is ~$3.00. This means that you will be making ~$150.00 per 1,000 visitors. Now let’s say that you decide to use CPA advertising and that your CTR remains the same. Out of these visitors that click on the ad, how many of them will proceed to do the required action? Let’s assume that 10% of these visitors that click on the ad actually do the specified action. This means that you would need a CPA rate of ~$30.00 to make the same that you do with CPC advertising. In reality the rates of CPA ads are ranges or a low fixed value; for instance, Free File Hosting: $0.23 – 1.19, HDMI Cables: $2.31, or Pay per Click Management: $3.00 – 153.85.  This means that unless the majority of your user’s are ending up on the high side of these rates, that CPC advertising will be the better choice for your website.  Also, it may be beneficial to use CPAlead instead of Google’s Referrals depending on your websites structure.  You really need to experience and look at the logistics before jumping to a conclusion about what advertsing method to useas they all can be used to generate more revenue in certain situations.

~ by admin on December 24, 2007.

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