CPA marketing model. How effective is it?

What is CPA Marketing

In the marketing world, CPA is actually an acronym for “Cost Per Action.” CPA refers to an affiliate commission model where affiliates (often publishers with websites) promote a specific action to their readers in exchange for a payment per action from sellers (also called advertisers).

In practice, CPA marketing is just a set of “affiliate” focusing specifically on payment for a specific action, rather than just a sale. This action could be a video, a submitted form, a downloaded app, or even a click — but often, the action is still a purchase or sale. It’s just treated differently than the more traditional commission model, which we’ll cover a little later.

What is “webmaster” and “affiliate network”

There are three types of participants in the CPA industry — product owners (advertisers), partners (webmasters), CPA networks — affiliate program aggregators. Each of the participants needs accurate statistics, tracking CPA actions and the ability to build analytics based on the information received. A webmaster needs to track CPA in order for affiliate sales to be fixed for him for the subsequent payment of remuneration.

The product owner needs statistics and CPA tracking not only for subsequent payments to partners, but in order to evaluate the quality of traffic and the integrity of webmasters who promote his affiliate program. An affiliate network is an intermediary between advertisers and traffic providers. Popular CPA platforms:

? Admitad

? CityAds

? Cpaexchange

? ActionPay

? Leadgid

? LEADS

? Advertise

The platform always takes a commission from the advertiser for its work, the average market rate is 30% of payments to partners. That is, for an advertiser, CPA costs are added up as follows: Cost of a lead for a webmaster + 30% + VAT (possibly). The commission includes technical integration of the offer, search and connection of webmasters, as well as mutual settlements with them. At the same time, the platform ensures order: it fights against violations, makes sure that webmasters deliver high-quality traffic, and advertisers pay on time, sometimes it plays the role of an arbitrator between the parties. The main goal of the CPA network is the same — to bring the advertiser and the webmaster together so that they work mutually beneficially.

Who is suitable and not suitable for the CPA model

CPA marketing is well suited for those who have a simple and understandable (“mass”) product with a wide audience.

Is the CPA model right for you? Checklist:

? The product is aimed at the B2C audience and is suitable for promotion on the Internet

? Product — mass

? The price of the product is competitive, and if the product also has bonuses (free shipping, gift) — this is an advantage

? It is technically possible to install a pixel on your site

? Your product has a wide geography

? The rate that you are ready to offer to the webmaster is not lower than the market rate

In some cases, this model will work poorly:

? With the help of CPA networks, it will not be possible to sell something exotic or complex, highly specialized, for example, equipment for oil refining.

? The CPA model does not work if the advertiser’s offer does not correspond to the market and competitors’ goods/services are significantly cheaper. Partners will not promote a product that is inadequate to market prices — it is unprofitable for them.

? CPA marketing does not work well in B2B — sales in this business often involve studying information, comparing options, and long-period negotiations, including offline. However, there are exceptions.

? There is no point in investing if the business is at the limit of production capacity and may not be able to cope with a significant surge in demand. This will disappoint both customers who do not receive the goods and partners who do not receive a reward.

? Consider the timing of the advertising campaign. For example, a two-week campaign is unlikely to bring results and allow you to evaluate the CPA channel. It is worth going to the CPA network if the period of the advertising campaign is at least three months.

How Webmasters Drive Traffic

Among the traffic sources can be social networks, websites, email newsletters, contextual advertising, teaser advertising, discount and coupon aggregators, cashback, brokers, mobile applications, any other methods of attracting traffic to the advertiser’s website, click-under / popup to prohibit the use of certain traffic channels. Also keep in mind that webmasters have an unspoken rule: “what is not prohibited is allowed”, so you need to describe the prohibited and allowed sources in as much detail as possible when working with an offer.

What is an offer and how to make one?

An offer is an offer from an advertiser for webmasters, which he publishes in the affiliate network. In fact, this is an analog of a brief for an advertising campaign. The main rule: the more detailed and attractive the offer, the higher the chance of finding a suitable partner.

What a correctly completed offer contains:

1. Name of the advertiser

2. Product Description

3. The sense of the proposal, the target audience, and the geography of the campaign.

4. Information about what is considered a paid action

5. Payment, filling out the form, installing the application, downloading.

6. Amount of remuneration for a webmaster

7. To determine the cost of an offer, you need to analyze your economy, understand how much you are willing to pay for a conversion, and be sure to study the offers of competitors with a similar offer — this can be done on different sites or on a special resource.

8. Allowed and prohibited methods of promotion

9. For example, it is not uncommon for advertisers to place contextual advertising mentioning a brand themselves, so webmasters are prohibited from using it so as not to create competition for themselves.

10. Explanation of creatives

11. You need to indicate whether webmasters can produce their own creatives and how to approve them, or specify that only advertiser creatives can be used and provide them (for example, in large companies it may be forbidden to use any creatives other than those approved by the global office).

12. Hold period

13. The time during which the advertiser will check the quality of the traffic brought from the partner; if everything is in order, after this period the partner will receive a reward.

What are the offers

The offer is most often open (published for everyone on the site). Less often — closed (VIP mode, when the network represents the interests of advertisers and itself goes to partners). Also, an offer can be exclusive, that is, placed in only one affiliate network. Usually, an exclusive implies more favorable conditions for the advertiser. With exclusivity, the advertiser works with only one network that best suits his subject. This is more convenient than working with many different networks, besides, the intersection of partners in networks is approximately 90%: good webmasters are present in different networks and monitor all offers, but work in the network where it is more convenient for them. However, large CPA networks have their own exclusive webmasters who work only with them on individual terms, so for the widest possible coverage, it is better to choose several affiliate networks. It is important that the conditions are the same for all networks. However, the decision of whether to give an offer for an exclusive is individual for each case.

What is fraud and how to protect yourself from it?

It happens that webmasters, in pursuit of profit, deceive advertisers — any fraudulent actions in this area are called “fraud”. This includes artificial traffic (bots that perform a targeted action, for example, install an application, and the advertiser, without revealing fraud, pays for these actions), and domain substitution. There are also tricks with cookies (cookies stuffing, toolbars) when unscrupulous partners steal orders from the advertiser and from each other, and an inexperienced advertiser can pay several times for the same action. Or the webmaster can use the prohibited type of traffic specified in the offer.

CPA networks try to protect the advertiser from fraud — they can check partners, and provide tools that allow you to monitor the quality of traffic. But no network can give a full guarantee that fraud will not happen — this is the specificity of working with third parties. It is important to monitor advertising campaigns, analyze traffic, and notice oddities.

Possible traffic oddities:

? a lot of transitions from one source

? many clicks from one IP address

? extremely low conversion rate with a large traffic flow

? vice versa, 100% conversion

? bursts of activity at night

? bursts of activity from unexpected regions

Such oddities should be immediately reported to the affiliate network, which will help to sort out the situation and, if the fraud is confirmed, will disable the scammer without paying for his conversions. Also, to combat fraud, you can turn to the anti-fraud solutions of independent companies that specialize in monitoring the quality of traffic — such a check can be ordered by the advertiser himself.

What is happening in the CPA advertising market now?

1. We are seeing that clients have become more interested in CPA marketing. At the same time, they look even more critically at the results of the promotion, and, based on the results, decide how to distribute budgets further.

2. E-commerce sites are growing organic traffic, so the need for additional promotion is reduced. With betting, the situation is different: almost all sporting events have been canceled, so bets are no longer needed.

3. Expectedly disabled or suspended the offers of the company that could not switch to an online work model or organize delivery.

4. Among the segments that are growing or at least not cutting budgets: are pharmacies, online education, online services, dating, online cinemas, and deliveries; growth is expected in the life insurance segment. In banks, there are also no changes so far, or there is an increase in those who launched “quarantine” actions. In the lending segment, growth could be replaced by a decline as banks tighten scoring.

For your CPA campaigns to be successful, we advise you to adhere to the following rules:

1. Describe the offer and its rules in as much detail as possible.

2. Before launching the offer, make sure that the technical integration is correct, and conduct test conversions.

3. Mark up traffic not only by affiliate networks, but also by webmasters and, if possible, by their sources — it’s easier to track the quality of the traffic delivered.

4. Be prompt: check the statistics from the CPA channel daily in your analytics system. Promptly and regularly give feedback on the quality of conversions (according to your CRM data).

5. If your site breaks or changes, immediately inform partners about it.

6. Do not delay payments to partners — remember the win-win approach.

7. Listen to the recommendations of CPA networks.

The main mistakes in the implementation of CPA marketing

1. Wrong topic chosen

2. Wrong affiliate program selected

3. Poor quality traffic is used

4. Simple offers are chosen

5. No optimization

6. Neglect of the interests and requirements of potential customers

7. Specialists lack patience

To avoid such situations, you need:

? work with reliable CPA sites,

? regularly analyze traffic and lead quality,

? specify requirements for creatives in the offer,

? weed out partners who break the rules,

? If fraud is suspected, contact the site or connect third-party anti-fraud systems.

As you can see, promotion through CPA networks requires time and resources from the advertiser. Therefore, many brands — more than 50% according to the 2021 study — prefer to run advertising campaigns themselves. Through agencies only if the agent has its own CPA platform

Written by Sergey Golubev (Сергей Голубев)

Crynet Marketing Solutions, vtorov.tech, EU structural funds, ICO/IDO projects, NGO & investment projects, project management