What Does CPA Stand for in Marketing?

There is no shortage of acronyms in the marketing world. From CMO to PPC and CPA, each of these abbreviations represents an important sales function and process. While you probably know that the CMO represents the chief marketing officer and the PPC stands for paying per click, you may be wondering what exactly is a CPA in marketing?

A CPA in marketing represents the cost of each acquisition or action and is a type of conversion rate marketing. The cost of each acquisition means the amount the company will pay for the ad that leads to the sale. Similarly, the cost per action refers to the cost that the company will pay for the ad that results in the action, such as subscribing to a newsletter or downloading an eBook. In any type of CPA, the company only pays for ads that lead to sales.

Why is a CPA important?

CPA advertising is often used when companies do affiliate marketing on external websites, blogs, or social media platforms. When companies participate in advertising that leads to a specific pay-per-click, this is called per-click advertising (or CPC). The payment limit is much lower than for CPA advertising. Both types of advertising are considered performance-based advertising because student or viewer performance determines payment.

When agreeing to a CPA advertising contract, the company and the advertising publisher will need to agree on a price paid for each acquisition or completed action. This type of program often puts a high risk on the advertiser because it relies on their ability to draw customers and push them to achieve the action. However, CPA advertising may appeal to publishers who have additional advertising space that may not be used.

For an advertiser, CPA advertising involves less risk because they do not have to pay for published ads but do not cause conversion. Conversely, CPC advertising may be at risk of exposure to click-through fraud, where ads are clicked fraudulently to generate advertising revenue.