What Is CPA Marketing And How To Get Started

“How to Make Money with CPA”, “CPA is the Future of Online Marketing” – the Internet is full of such headlines, and millions of people manage to make money out of thin air, working literally from the beach in Bali. What is this CPA marketing everyone is talking about? Keep reading and we’ll figure it out together.

Definition of CPA marketing

CPA is an abbreviation for “cost per action”. This term has two definitions: 

• Affiliate marketing, also called performance marketing
• The payment model in affiliate marketing

Let’s look at both of them.

CPA marketing as performance marketing

“Price per action.” What kind of action is meant here? It’s a purchase, subscription, registration or download, that is, a specific targeted action that demonstrates a user’s interest in a product or service. It is through such actions that brands, companies, and therefore publishers make money. This is the whole point of affiliate marketing, which can be put like this: CPA marketing is the online promotion of services and products with advertisers paying only for targeted actions by users and publishers earning a commission for each targeted action performed through their efforts. It’s also called affiliate marketing.

What’s so innovative about CPA marketing?

Unlike the usual promotion, publishers have a vested interest in attracting users, because their level of income depends on it. Moreover, there is no earnings ceiling for them: the more your users take targeted actions, the more you earn. For example, some publishers at Indoleads earn $120,000+ a month. Is it a lot? Definitely, not bad. But there’s a space for making more. It all depends on you and how much effort you put into it. 

A brief introduction into the history of CPA marketing

The concept of commission for referring customers appeared long before CPA marketing and the Internet in general. However, it was officially formulated and patented by an American entrepreneur William Tobin in 1996. He founded the company PC Flowers & Gifts, which in 1995, after launching its website, began to attract customers through a network of affiliate partners, the number of which reached more than 2500. A year later, Tobin patented a system to promote services and products through affiliates. This was the official birth of the formed concept of affiliate or CPA marketing.

Similar ideas were already in the air. In 1994, an American company selling music CDs, CDNow, launched its affiliate program. Amazon did the same in 1996. As you can see, Amazon was by no means a pioneer in affiliate marketing, but it was its affiliate program that became widely known and set an example for millions of others. In 2000, Amazon announced that it had obtained a patent on parts of the affiliate program, but that patent did not infringe PC Flowers & Gifts’ rights.

Since the late ’90s, affiliate marketing has evolved by leaps and bounds. The first affiliate networks began to emerge. In 2006, 2.16 billion pounds were earned in the UK alone thanks to the efforts of publishers. This period coincided with the emergence of blogging, when millions of blogger-owners were able to monetize their content and got rich.

Start your affiliate journey with Indoleads

CPA as a payment model

CPA is also one of the payment models along with CPS, CPL, CPI and others. What is a “payment model” anyway? 

It’s the type of payment used in a particular affiliate program. Simply put, it’s an indication of the target action for which you as a publisher will be paid. If the goal is to sell products, then CPS (price per sale) is used, if the goal is to bring in a lead – CPL (price per lead). Simple and logical.

CPA implies payment for action/involvement of a customer. The action here means the subscription or registration of the client, which means, you get paid for the very fact of attracting a user who subscribes to a particular service. This payment model is most often used to promote blogs, courses, or any services where users subscribe to a service.

Which actions are considered as targeted actions on CPA model?

• Filling contact details (email, phone number)
• Registration in the service
• Service subscription

However, broadly speaking, CPA as a payment model embraces all other payment models, because all of them imply some sort of actions taken by users. So, don’t get confused when you see advertisers indicating CPA as the payment model in their affiliate programs implying attracting buyers or leads. 

How to calculate CPA

CPA is an indicator of expenses for getting one action/customer. There is the following formula to calculate it:

For example, the advertising budget is $7000. Marketing campaigns brought 700 targeted actions. So, CPA = $10. If the CPA figure is equal to or less than the planned cost, the advertising campaign was successful. 

How CPA marketing works

There are two key figures in affiliate marketing: an advertiser and a publisher (often called an “affiliate” or a “webmaster”). An advertiser makes up an affiliate program (also called an “offer”) where they specify all conditions for promotion of their services or goods: commission (also called “payout”), payment model, conversions rate, forbidden types of traffic, etc. A publisher connects to the program and gets an affiliate link with a personal ID code, by which an advertiser or a CPA-network tracks the number of conversions, i.e. the number of target actions.

But where to find an advertiser? You can contact companies and brands separately, search for their affiliate programs managers and connect to all the programs one by one, tackling all issues by yourself. But you don’t have to do that.

Now we’ve approached the third participant of affiliate marketing – an affiliate network or CPA-network. What do these networks do?

An affiliate network brings together advertisers and publishers, allowing the former to find website owners with target audiences and the later to find relevant and profitable offers for their Internet projects. Some affiliate networks focus on a particular niche (i.e. category of offers), such as gambling, e-commerce, crypto and others. There are also CPA-networks which work with dozens of niches at once, such as Indoleads.

Let’s see how it works:  

A kids products brand has placed its offer in the CPA-network. A publisher who has a website with the reviews on the products for children and tips for young moms, and is registered in this CPA-network, connects to the offer, places an affiliate link on their website and starts driving traffic. 

A publisher gets a fixed percentage of each sale made by a user who clicks on their affiliate link. The more sales a publisher generates – the higher earnings they get. Once a month or even more often a publisher withdraws his earnings to an e-wallet or a bank account.  

Sounds simple, right?

One of the biggest perks is definitely freedom which comes with affiliate marketing. A publisher can combine their work with a day job or even turn it into a full-time income. 

We have 2000+ affiliate programs and tons of offers for newbies!

How to become a publisher?

To work with affiliate marketing, you don’t need big investments. Moreover, CPA-networks don’t charge you when you sign up. So if you’re asked to pay for joining an affiliate network – it’s a massive red flag, check it twice, because it can be a scam.

So what do you need to become a publisher? 

You need a traffic source – a website, a blog on social media, a channel on Youtube or other platforms with an active audience. Traffic source is a flow of users who will click on affiliate links and perform targeted actions.

Active audience is the key to success in the field of CPA marketing. The more your audience trusts your opinion, the more likely they will buy, subscribe and download from the advertiser’s website. That’s why affiliate marketing is considered to be about building a long-term, trusting relationship between a publisher and their audience. A publisher’s expertise in some area is the key to user trust. 

Where to get traffic? 

This question is the most important for a publisher. Traffic sources can be free and paid. The main free source of traffic is your own resources: websites, blogs and social network accounts. Besides, there is email marketing, which faithfully serves affiliates for decades. Also don’t forget about thematic forums, Quora service, websites with reviews, platforms for social journalism.

Paid traffic is diverse:

• Search engine traffic

Google Adwords and Microsoft Ads are the most widely used and the most effective in this category. It’s also called contextual advertising. Here you can target using keywords and relevant queries. This is one of the most powerful advertising tools. However, setting up contextual advertising is not easy for a beginner. 

• Social media traffic

Traffic from Facebook, Instagram, and other social media platforms can and should be used. Here you can run targeted ads by geography, age, interests. Ads will be shown to those who fit the criteria.

• Mobile traffic 

Push notifications, pop-ups and pop-unders are highly effective. They allow users to target audiences and show ads based on their specific operating systems, browsers, and phone brands. 

Traffic Arbitrage

When we talk about paid traffic sources, we cannot let traffic arbitrage go unmentioned, as it’s one of the most effective ways to drive traffic and make money with affiliate marketing. 

Traffic arbitrage means buying traffic on third-party websites and social media and redirecting it to another resource, earning money on the price difference.

How does it work?

An arbitrageur starts promoting advertiser’s products. They set up advertising in one of the sources of paid traffic, for example Google Ads, pay for keywords, and as a result, an advertiser’s goods are sold and the arbitrageur gets a commission. For example, an arbitrage specialist has spent $100 on Google Adwords and received a payment of $500 from the advertiser, the profit is a difference in revenue – $400. 

An arbitrageur can be a publisher, who in addition to his own resources, also uses paid traffic sources. The goal is not just to get traffic to the advertiser’s site, but to make money, and this requires finding the best approaches, building effective sales funnels, in a nutshell, anything that brings cheap traffic that can be monetized.

Overall, arbitrage is a fast way to attract a user, but it requires some investments and a clear understanding of the entire traffic buying structure.

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Wrapping it Up

CPA marketing is not a trend, it’s a real marketing tool for millions of companies and a source of income for hundreds of millions of publishers. The turnover in affiliate marketing is estimated at $12 billion. And this figure will keep growing, because as long as there is Internet and there is e-commerce – CPA-marketing will be alive. 

At Indoleads we always attract only trusted advertisers and publishers who are willing to work on results. We already have more than 2000 affiliate programs from 180+ countries around the world. Working with Indoleads, you get a long-term partner, and all effective online marketing tools.