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08 June 2021

What is cost-per-action (CPA) or cost per lead (CPL)


What is cost-per-share (CPA)?

Cost-per-action (CPA) is a payment model for online advertising, in which payment is based only on eligible shares, such as sales or registrations.

Shares defined in a cost-per-share agreement are directly linked to a particular type of conversion, with sales and subscriptions being the most common. This does not include click-only bidding, which is specifically called cost-per-click or CPC.

The cost-per-action (CPA) model is at the other end of the spectrum in the cost-per-display (CPM) model, with the cost-per-click (CPC) model somewhere in between. In a CPA model, the publisher assumes most of the advertising risk, as their commissions depend on the good conversion rates of the creative units and the advertiser's website.

Marketers looking for cost-per-share transactions have several options.

Stimulus sites may offer CPA pricing for different types of leads, although common incentive traffic warnings still apply.

The most common use of performance-based pricing is affiliate marketing, where marketers / advertisers determine what actions they want to reward and how much they are willing to pay.

What is the cost per lead (CPL)?

Cost per lead (CPL) is a payment model for online advertising, in which payment is based on the number of qualified leads generated.

Cost per lead (CPL) is a form of performance-based advertising. In a way, this is a happy environment between online advertising models, such as cost-per-display (CPM) or cost-per-click (CPC), where a publisher is not directly rewarded based on how the traffic and the cost per sale work, where the publisher assumes full responsibility for how that traffic is transformed. They can't control everything that happens on the advertiser's website.

Unlike the cost per sale, the company that generates potential customers does not receive their compensation directly from the conversion of sales of those potential customers. However, for an advertiser to continue to pay for potential customers from the same source, they must eventually get an acceptable conversion rate.

The cost-per-lead model allows shared responsibility for performance between publishers and advertisers. Publishers are responsible for displaying ads to the right audience in the right way to generate a response. Advertisers are responsible for maximizing the conversion of these leads to sales.