CPA (cost per action)
CPA (cost per action) is an advertising payment model where the advertiser pays only for a completed target action, and also the average cost of such an action.
In plain words
Under the CPA model the advertiser does not pay for impressions or clicks. They pay when a person does what the business needs: submits an application, signs up, pays for an order. The risk of ineffective advertising shifts to the traffic supplier.
The term CPA is used in two senses: as a payment model and as a metric, the average cost of one action.
How it is calculated
CPA = advertising spend / number of target actions.
A hypothetical example: 2,000 units spent, 40 sign-ups received. CPA is 50 units per sign-up. If you work through a network, CPA equals the payout per action stated in the offer.
Why it matters to an owner
CPA lets you know the price of a result in advance and plan the budget. But an “action” does not always mean money. A sign-up that never became a purchase brings nothing. So CPA has to be compared with how many of those actions turned into payments and how much a client brought in over their whole lifetime.
For a sales team, CPA is a reminder that every application has already been paid for. Losing it in a chat is a direct loss, not “just a lead that did not work out”.
Common mistake
Choosing an action that is too early in the funnel. If you pay per application, traffic suppliers will optimize for applications rather than buyers. The closer the paid action is to real money, the less room there is for junk traffic, but the longer and more complex the settlements.
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