4 Reasons to Use CPA (Cost per Action) Marketing in Your Business

CPA marketing can be a great way to increase ROI and promote your brand with relatively low risk. Find out how to expand your audience reach with this affiliate marketing tactic.

We may receive compensation from partners and advertisers whose products appear here. Compensation may impact where products are placed on our site, but editorial opinions, scores, and reviews are independent from, and never influenced by, any advertiser or partner.

Digital marketing techniques have been game-changers for many online businesses. More traditional methods of bringing in new customers such as PPC (pay per click) and CPM (cost per mille) marketing have both been popular in recent years, but pay for clicks and impressions that do not always turn into leads. This can create frustration for many businesses that are tired of paying for ad strategies that just aren’t producing the right ROI.

But what if your business could pay only after you receive a lead or actual conversion? How much money could you save on marketing budgets? CPA (cost per action) marketing does just this — offering a scalable way to grow your ROI with minimum risks and affordable costs.


Overview: What is CPA marketing?

CPA marketing is a type of affiliate marketing that aims to offer a commission to an affiliate partner after a particular action has been completed. This is a substantial new way of marketing digitally because it allows you to only spend money after a potential customer has completed an action of your choosing.

Your business can identify what this specific action is — purchasing a product or service, filling out a form, watching a video, asking for a quote, etc. The affiliate is then only paid post-purchase or after this action has been completed, making your marketing spend much more valuable.

Most e-commerce businesses that employ CPA advertising techniques partner with celebrities, influencers, or top names in their industry as affiliates. This method allows affiliates with large followings to promote a company’s products or services to their followers or fans in order to earn money for themselves, as well as the business they’re working with.


How does CPA marketing work?

Let’s look at an example of CPA marketing in action to better understand how this marketing strategy works.

For instance, if you own an apparel company and partner with an influencer with a large social media following, that influencer would be your affiliate. They’re paid to promote a product, service, or your overall brand, but only receive payment if their followers complete your specified action.

In this case, you might decide to pay your affiliate $10 for every $100 worth of apparel fulfilled through your e-commerce store when customers use their affiliate link. In this case, your return on ad spend would be 10:1, which is quite impressive.


4 benefits of CPA marketing

If you’re interested in using CPA marketing to promote your online store or brand, here are some benefits you should be aware of.

1. It can expand your audience

One incredible benefit of employing CPA marketing is how quickly it can broaden your audience. By partnering with influencers, you’re able to get your products in front of more eyes, potentially expanding your customer base. This method is particularly effective if you’re trying to break into a new audience or demographic.

2. It enhances your brand reputation

On top of adding new customers, partnering with affiliates can also boost your brand reputation and recognition. This can solidify your brand as one of the top competitors in your industry, which can positively affect your sales and digital presence. It will also improve consumers’ trust in your overall brand and suite of services or products.

3. It’s extremely affordable

Perhaps most importantly, CPA marketing’s main benefit is how affordable it is, making this method an easy way for companies of any size to engage with new prospects. Instead of spending money on digital ad campaigns aimed at drawing impressions, clicks, and engagements that won’t turn into leads or conversions, you can instead improve your marketing ROI with CPA marketing.

4. Lastly, it’s low risk

Since CPA marketing is a performance-based marketing technique, it’s very low risk for companies and affiliates. Both you and the affiliates you partner with only make money if the desired outcome is reached. This motivates affiliates to market on your behalf (to earn their commission), while you only pay out marketing dollars when your desired goal has been achieved.


5 CPA marketing tips to improve conversion rates

Although CPA marketing has lower risks and potentially higher rewards than other digital marketing techniques, it’s not a foolproof method. Here are some tips to consider to help your affiliate marketing strategies perform as well as possible.

1. Fine-tune your messaging

An affiliate might be doing a great job at promoting and marketing your product, but if a user lands on your page and isn’t further compelled to complete a purchase, that loss is on you. High quality messaging is the key to converting users. You’ll want to be sure you’re fully conveying the value of a particular product by first addressing the pains users will be (or are) experiencing without it.

Make sure your messaging matches the language your affiliate will be using, so users are never confused once they start the buying process.

2. Establish multiple goals

Yes, your ultimate goal may be for a user to purchase a product or sign up for your newsletter or email updates. But setting up multiple goals can help you track user behavior on your site in order to improve your landing pages, further expand your reach, and increase your sales.

To do this, you’ll want to track multiple smaller goals, such as the time a user spends on a page, the number of pages viewed, etc. You can use this data to make your landing page more engaging to boost potential conversions.

3. Always employ A/B testing

It’s impossible to know upfront if a landing page is providing the right experience for a user. That’s why A/B testing is so crucial. It allows you to test out several different landing page models, perhaps with major or minor differences. You’ll be able to learn a lot from your users’ behavior, so you can optimize the best landing page possible.

Once you have a landing page that’s performing well, don’t stop testing. There are always new techniques to improve upon your successes.

4. Review your budget frequently

Once you have hard data from your first CPA marketing campaign, you’ll be able to start to understand how to set your CPA budgets. It’s a good idea to review any existing PPC or other Google Ad campaigns to set an initial budget. You might find you can increase your budget, which could lead to exposure to influencers and affiliate marketers with even larger followings and reach, which can boost your ROI significantly.

5. Don’t shut down other digital marketing strategies

CPA marketing is a great way to grow your business and increase sales, but you’ll often see the best results when you combine this strategy with your existing digital marketing campaigns. Continue to review your digital ads for winning strategies and use any wins you experience with one campaign to improve the other.


CPA marketing can complement your ongoing digital ad efforts

Adding CPA marketing to your digital ad strategy is a great way to bring in easier, more affordable, and lucrative wins. CPA marketing allows you to only pay for your marketing efforts once a sale or agreed upon action has been taken, offering you a low-risk way to increase your ROI, audience, and overall brand awareness.

5 Software Apps Every Small Business Owner Needs – And 3 to Avoid!

Focusing on the wrong software can cost you hundreds, if not thousands of dollars -- not to mention hours of headache. That’s why we created this free, 13-page report. Discover the 5 most critical apps to help you run your business (as well as the ones you probably don't need). It’s a must-read!

The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned. Click here for more information.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and recommends Alphabet (A shares). The Motley Fool has a disclosure policy.