CPC vs. CPA: What’s the Difference?

To get maximum leads, you need to take into account many factors and run traffic correctly. An important point when creating an ad campaign is the choice of a way to purchase traffic. In this article, we will look at the main payment models, tell you what CPA and CPC are, and which model is right for you.

What is an payment model?

An advertising model is a system whereby an ad network charges a fee for placing your ads. Usually, the essence of the model is reflected in its name: Cost-per-Click – “pay per click”, working on CPC, you will pay for each click.

Most often, you will meet the first two (CPC vs CPA), so let’s analyze them in more detail. How to calculate the cost of a campaign? What are the pros and cons of each of these models? Let’s figure it out!

CPC meaning in affiliate marketing

CPC  (cost per click) – a payment model that involves paying for a targeted action – a click. The term is closely related to the PPC advertising model (pay per click), which is now often identified with contextual advertising.

Contextual advertising is a type of payment, where content is formed and shown to the user based on his interests. It is represented by a small informational ad, the content of which corresponds to the user’s request and calls for an action – buy, order, go.

Efficiency: contextual advertising in search results is an effective and fast tool for attracting customers. The conversion of classic contextual advertising for an online spare parts store is 3-5%, remarketing is 15-20%.

Features of CPC advertising model:

Advantages of CPC:

• CPC allows you to track the number of clicks on your ad, making it easier to analyze the target audience (it is quite possible that you need to change it), as well as the quality of the creatives.

• Detailed advertising settings. Most CPC ad networks allow you to customize your campaign in detail so that you have the best reach: you can select the desired GEOs for targeting, determine the age range of potential customers and customize ads to meet their interests.

• Your ad will be seen anyway. Even if no one clicks on the ad, there is a chance that users will still remember it. And when they see it again, for example, in the format of an e-mail newsletter, they’ll click it with more confidence.

Disadvantages of CPC:

• As a rule, CPC advertising is quite expensive. To achieve a high result, you need to get as many clicks as possible. Don’t forget that the more clicks you get, the more money you’ll have to pay for them.

• Seasonal jumps in CPC. The average CPC is constantly changing up or down. In some months there is always a drop in CPC and you can run your ads very profitably. And between Thanksgiving and Christmas, for example, people start shopping a lot more. Knowing this, people also buy ads more actively, which leads to a sharp increase in demand for it, and the average cost per click becomes higher.

CPA model

Cost Per Action (CPA) is a payment model in which an advertiser pays for a specific action on a website. An action can be anything – register, pay, submit a form, or view N pages.

Advertising systems, in general, don’t care what to take money for – the target action is determined by the advertiser. The main thing is that conversion tracking is set up correctly.

Unlike cost per click, CPA is a completely transparent interaction model, as the advertiser pays for the expected and predictable result.

Where it is placed: CPA advertising is not placed anywhere, because its format is different from the classic one. Portals, price aggregators and other sites that offer to perform actions on the pages of their site, without going to the advertiser’s site, can work according to the CPA model. 

What the advertiser pays for: for the completed action – an order, a call, etc.

Efficiency: the return for the advertiser is 100%, the share of the total number of orders in the online store ranges from 15-50%.

What to pay attention to: if the user doesn’t complete the planned action, you don’t pay for advertising services.

CPA is used under the following conditions:

• Your ad campaign is transaction-focused: sales, registrations, downloads, etc.
• Ads have been working for some time, and you have collected enough statistics on conversions. The more data, the more efficient the algorithms of advertising systems work. For new campaigns or sites that don’t have conversion tracking set up, this model won’t work.

Benefits of CPA:

• you pay only for achieving the desired result.
• Your ads can be seen thousands of times, and you don’t have to pay for impressions if you don’t get conversions from them.

• CPA placement gives advertisers a clear idea of ​​how many leads are generated by each promotion channel.

Disadvantages of CPA:

• This payment model is quite expensive.

• CPA advertising has a lower conversion rate.

Difference between CPC and CPA

CPA is different in that the payment is set for the completed target action, for example, adding a product to the cart, filling out a form, sending a request for a call, and so on. This model is used in many areas of marketing, but is most often found in affiliate networks, Google Ads. Direct platforms, as well as in the social networks Facebook and Instagram.

CPC is a useful model because it can be applied in any circumstance (including new campaigns and sites without conversion tracking set up). But if the conversion rate of your pages and ads is low, then CPC  model will bring expensive conversions.

Conclusions

CPC vs CPA models are very popular, but in areas where competition is high, the cost per click or action can be too high. To get ahead, you have to put in a lot of effort. Remember that CPC vs. CPA depends mainly on the characteristics of the ad – the correct selection of key phrases, the creation of attractive creatives, interesting texts, and much more are important here.

Experiment, customize ads, keep working with ads, and then you will achieve the most effective results!