Cost per action or pay per action (PPA) is an online marketing billing method in which advertising costs are calculated according to specific user actions. Said action can be determined individually by you. They can be, for example, the following:
Depending on whether one of the actions was taken, a commission is due. These are the cost per action.
With the CPA billing method, the costs are linked to conversions. This means that all actions that occur on your website or landing page must be paid for. To evaluate how successful your campaign was, you can then access the analysis tools of your website.
To calculate the CPA you need the following formula:
| Amount of budget spent ÷ number of all actions = CPA |
You place ads for a total of 200 $, 100 actions were triggered according to your target intention. Thus you have a CPA of 2 $. From this value you can see that one action cost you on average 2 $.
The CPA model has several advantages and disadvantages.
| ADVANTAGES | DISADVANTAGES |
|---|---|
| – Transparent cost structure – Simple evaluation of the campaigne | – Higher base price than for example PPC – More commitment required |
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