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What is CPA Marketing
CPA marketing, also
known as cost per action marketing, is a style of the affiliate marketing model that offers a
commission to the affiliate when a specific action is completed.
The lead action can be
anything from making a purchase to getting a quote, watching a video, or
filling out a form.
Ecommercesites around the globe can leverage CPA marketing to create
different offers and online marketing campaigns.
CPA networks then
promote these campaigns through affiliates.
The CPA affiliates are
paid a set fee each time a referred visitor completes the action or offer.
The CPA model is a
simple concept once you break down into how it works and who’s involved.
- Affiliate or Publisher: The influencer (blogger, brand,
business) that promotes a business or product in order to drive traffic to the ecommerce site and make a specific conversion.
- Business or Advertiser: The brand that desires a partnership
with an affiliate to drive quality traffic to the business’ website and
increase sales, generate leads, or boost conversions.
- CPA Network: The platform that brings together the
affiliate who wants to make money by promoting products and the businesses
that want their products promoted.
Let’s say a popular
cooking blogger named Lisa (our affiliate in this story) has a healthy
following of YouTube subscribers and blog readers.
She learned how to start a blog to make a living in
her kitchen—trying new recipes and recommending specific brands and products to
her audience.
After developing a
guest blogging strategy, increasing web traffic, and building a cult following,
her cooking crowd is eager to buy the next kitchen gadget she recommends.
Then we have our
example business, EasyCooking.
EasyCooking
manufactures high-quality kitchen gadgets – from cutting boards and measuring
cups, to professional mixers and food processors. They’re looking to expand
their marketing reach and would love to take advantage of Lisa’s audience of
budding chefs.
A CPA marketing
network brings Lisa and EasyCooking together.
Ecommerce businesses like EasyCooking
utilize CPA networks to find and partner with influencers like Lisa.
Influencers like Lisa,
who want to make money doing what they love and engaging their audience, can
turn to CPA networks to find companies that want to pay her to use and promote
their products.
Lisa sends her
audience to the business’ website and makes a commission on each sale or lead
conversion.
In turn, EasyCooking
makes money from Lisa’s referral traffic.
The network brings
them together and the audience gets to try new products and learn about
emerging brands. It’s a win-win.
CPA network
terminology isn’t complicated, but there are a few key terms you should know as
you launch.
- Affiliate Manager: A person who manages an affiliate
program for a merchant. They are responsible for recruiting, engaging with
affiliates, and generating revenue for the merchant.
- Category: The niche for which the CPA offer applies
(sports, fashion, beauty, health, etc).
- Chargeback: When a sale “falls through” for an
action an affiliate has already paid for. Since the sale was never
finalized or an item was returned, the previously given commission is
deducted back into the advertiser’s account.
- Commission: The payment an affiliate receives—either a
flat rate or percentage—once a successful conversion is tracked.
- Contextual link: A text link placed within an
affiliate website that links to the advertiser’s website.
- Conversion rate: The percentage rate at which a
particular action is performed. In other words, the number of successful
conversions divided by the total traffic.
- Cookies: In affiliate marketing, cookies are used
to assign a unique ID to a user who has clicked the affiliate link to an
advertiser’s site for a specific duration. The affiliate will receive
credit for the conversion in this predefined window, typically 30-90 days.
- Cost per action (CPA): An online advertising strategy
that allows an advertiser to pay for a specified action from a target
customer.
- Earnings per click (EPC): The average amount an
affiliate earns every time a user clicks an affiliate link.
- Offer page: The webpage where the conversion occurs
after a visitor takes the required action.
- Return on investment (ROI): Refers to the amount of
money made with a campaign. It is the revenue divided by the ad spend,
multiplied by 100.
The
CPA affiliate marketing method is advantageous for businesses because they
don’t pay unless a successful conversion is made.
The payouts differ
based on competition and average commission rates in each vertical.
For example, headphone
manufacturer Skullcandy’s successful affiliate program offers a 5%
commission on sales based on a competitive electronics category.
Kelty, the outdoor
camping gear company, provides affiliates up to 10% on a tiered commission
structure. It’s all based on the competition within your vertical.
The cost per action
formula is a very low-risk method for advertisers, as they only pay for the
desired actions after they occur; unlike paid traffic, for example, where you
just pay to get people on your site through ads.
The cost per action
for an advertiser can be determined by dividing the total cost of the marketing
campaign by the number of successful actions taken.
Let’s look at our
pretend company, EasyCooking, as an example.
If EasyCooking spends
$1,000 on a marketing campaign and gains 25 successful conversions on a signup
form for a recipe ebook, the cost per action is $40.
While the cost per
action varies by industry, Google AdWords reports the average cost per action
across all industries is $48.96.
- The automotive industry has the lowest CPA at $33.52.
- Technology has the highest CPA at $133.52.
The top 10 percent of
advertisers boast CPAs up to five times better than the average.
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What are the Benefits of CPA Marketing?
CPA marketing is very
profitable when you target the right audience (as an affiliate) and connect
with quality influencers (as a business).
Compared to
other ecommerce marketing channels, the cost per action formula offers a
number of benefits, including:
1. Easy to set up.
CPA marketing is easy
to launch: you only need a website and a CPA network.
It takes very little capital
upfront to use this marketing technique.
When
you partner with a trusted CPA affiliate network, there’s no guesswork as to
how to get started.
By using your own
website and choosing a CPA offer, you can begin getting traffic from affiliate
sites almost immediately.
You’re not paying for
traffic that doesn’t convert.
If an affiliate’s
referrals continuously offer low-rate conversions, diversify your affiliates
and shift your focus to a more successful influencer.
3. Low Risk.
Because no payment is
made to the publisher unless a referred visitor converts to a customer or
completes a specific task, the risk is low for ecommerce businesses.
There
are tools like Mentionlytics that help you monitor how the affiliate
is marketing your brand or product, but cost per
acquisition marketing doesn’t call for an immense investment of time or
capital.
4. High ROI.
Affiliate marketing
generates 16 percent of all online marketing.
CJ by
Conversant’s Affiliate Customer Insights reveals that customers spend
more money when making a purchase off an affiliate’s recommendation.
This means these types
of marketing campaigns drive a better quality of traffic and offers a better
value than most traffic sources.
Affiliate marketing
produces:
- 58% higher average customer revenue.
- 31% higher per customer order average.
- 21% higher average order value (AOV).
Plus, the more sales
you drive, the higher your commissions can be. For instance, the BigCommerce
affiliate program starts at a 200% bounty payment and goes higher based on
sales volume.
CPA marketing gives
you scale and distribution.
You
get to scale your brand message faster and more consistently to the largest possible
audience.
Whether your brand is
in fashion, electronics, home and garden, pet supplies, beauty, or almost
anything else, most business verticals use CPA marketing.
Take Bliss, a
skincare and beauty product line, for example.
Their affiliate
program provides a 10% CPA payout on all sales.
Now beauty
influencers, bloggers, and media sites have the tools to easily promote them,
receive a 10% commission on all sales, and expand their affiliate marketing
reach.
In
every vertical, there’s almost always an affiliate website available for
partnerships through a CPA affiliate network.
Spread your brand
awareness by reaching the affiliate’s audience—a group you may have never
otherwise reached.
CPA Marketing Tips & Best Practices
CPA affiliate
marketing is not a “set it and forget it” method.
You must invest the
time to cultivate a relationship with your CPA affiliates to create a strong
conversion funnel to keep improving your conversion rates.
To drive success
through your CPA marketing strategy, try these tips:
1. Consider hiring an Affiliate Manager.
To get the most out of
your CPA marketing efforts, you need a dedicated in-house resource – a person
who can recruit new CPA affiliates, engage with website owners, send them new
promotions, and drive consistent revenue for your site.
Affiliate Managers can
provide help for affiliates by taking the following actions:
- Review affiliate offers and provides insight into
strategic changes.
- Offer insight on what types of affiliate links or ads
to use to optimize conversion.
- Provide tips on content that will effectively
promote the merchant’s products.
- Send product updates and new creative to CPA
affiliates.
- Provide commission bonuses and incentives for
high-performing CPA affiliates.
Affiliate Managers can
provide help for advertisers by taking the following actions:
- Connect you with and recruit the top-performing
affiliates in your niche.
- Brainstorm new promotional ideas for particular
products.
- Send consistent brand messages and product updates to
the CPA network.
- Negotiate contracts with affiliates, oversee ROI, and
compare your affiliate program to others to stay competitive.
- Guide you with creatives that partner well with the
best affiliate programs and websites.
- Deal with taxes and set up your accounting
services.
2. Avoid CPA networks with bad reviews.
The downside to CPA
marketing (as with any online money-making opportunity) is the questionable
networks that have shady practices.
Before you jump on
board with any CPA affiliate marketing network, read the reviews.
Odigger offers
network reviews so you know which are worth your time and which to avoid.
Click on the Network
Reviews tab and search for the one you’re interested in to see what others have
to say.
Keep in mind that no
network will have a 100 percent satisfaction rating, so one or two complaints
shouldn’t scare you off.
The most popular
negative reviews topics include:
- Lack of payment (please note that even highly reputable
CPA marketing networks may withhold payment for specific reasons, so
review the network’s policies before signing on).
- Unhelpful affiliate managers.
- Difficulty signing up for network or using the platform.
3. Utilize Native Advertising.
The days of embedding
ugly, in-your-face banners across the header of your website are over.
It
doesn’t take blaring advertisements to convert customers.
In fact, native ads,
or those that resemble your website’s color, layout, and theme, are among the
marketing trends to watch in 2020.
- Nonsocial native spending will grow more than 80
percent this year to $8.71 billion.
- Seventy-seven percent of all mobile display ad
dollars will be spent on native placements.
- eMarketer predicts native advertising will make up
nearly 60 percent of display spending in 2018 in the US.
The Top CPA Affiliate Networks
As we discussed
earlier, CPA affiliate networks with bad reviews should be avoided, but there
are some bright spots when it comes to reputable networks.
Platforms that provide
knowledgeable affiliate managers, numerous offers, and competitive payouts are
the ones to try.
Reputable CPA
affiliate networks include:
1. MaxBounty.
Max Bounty offers
trained affiliate managers who focus on a merchant’s marketing needs.
There
are nearly 20,000 affiliates on the platform, and the affiliate managers are
knowledgeable of which partners will be the best fit for businesses and
affiliate marketers.
The affiliates are
vetted and offer high-quality traffic to the merchant’s site.
Newbies
to MaxBounty have access to a plethora of training material and the
program offers weekly payouts.
2. Clickbooth.
Clickbooth has been
around since 2002 and places a strong focus on making its program easy and
innovative for merchants.
Clickbooth claims
its artificial intelligence technology can provide up to 25 percent increased
earnings per click (EPC) for affiliate partners.
There are no costs to
join Clickbooth as an advertiser.
Advertisers can view
traffic performance from each individual affiliate, and if they desire, can
manage budgets, payouts, schedules, and campaigns themselves or allow the
Clickbooth team to handle the work.
3. Peerfly.
Launched in 2009,
Peerfly is a small affiliate marketing company.
It was ranked as
the second best CPA network in 2016 and made the top five for 2018.
PeerFly offers
to match or pay even more than any other affiliate network.
The network offers
free training for affiliates and payouts weekly, bi-weekly, or monthly through
PayPal, Amazon gift cards, checks, bank wire, Payoneer, and Bitcoin.
4. Admitad.
Admitad has more than
520,000 publishers and more than 1,200 advertisers.
This network was
launched in 2009 in Germany and hosts international offers, giving it a large
footprint across ecommerce businesses.
Admitad boasts
a client-oriented approach with personalized training and other learning
options.
Affiliates
only need a $10 minimum for payouts and can be paid via PayPal, epayments, and
wire transfer.
The network offers
anti-fraud technologies, cross-device tracking, and deep linking options.
5. W4.
W4 reviews
publisher applications before approving their accounts.
The publishers can
boost their revenue by referring others to this network.
W4
has a dedicated support team to help affiliates and merchants and offers a
rewards program for the highest-earning affiliates.
CPA Marketing Trends
Following the hottest
CPA marketing trends in 2020 will increase your revenue and help create a
strategic approach for next year’s digital marketing plan.
- CPA marketing is expected to expand to developing countries in
2020 and beyond.
- CPA marketing should have a focus on copy rather
than pop-ups and headlines.
- Influencer marketing will begin to overlap into CPA
marketing, giving many new ecommerce businesses even
more reason to join CPA affiliate networks.
- Ecommerce businesses will shift a portion of their
budget from traditional marketing (PPC, social media, and banner ads) to
affiliate and performance marketing.
Reliable CPA affiliate
marketing networks will continue to increase transparency and offer the
data-driven information that clients demand.
Executive Summary
CPA marketing is the
next step in digital marketing that ROI-minded marketers are looking for.
It’s a fast-paced and
optimization-friendly cooperative tactic that puts real business results at the
forefront.
It’s
a way to scale and distribute your brand message while building strong
relationships with partner websites.
This customizable,
easy-to-launch strategy is also a win for the affiliates, as they can choose
offers that mirror their own brand and website, allowing them to monetize
content on their site with banners and contextual links.
If you want to expand
your website’s reach, maintain a strong return on investment, and feel a real
business impact, incorporate CPA marketing into your strategic plans.
Want more insights like this?
We’re on a mission to
provide businesses like yours marketing and sales tips, tricks and industry
leading knowledge to build the next house-hold name brand. Don’t miss a post.
Sign up for our weekly newsletter.
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TABLE OF CONTENTS
·
How Does CPA Marketing Work?
·
What are the Benefits of CPA Marketing?
·
CPA Marketing Tips & Best Practices
·
The Top CPA Affiliate Networks
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