What is CPA in mobile marketing?
CPA, or cost per action, is a pricing model where advertisers pay a fixed rate to media sources based on a specified action.
Unlike cost per install (CPI), which is based on attributed user installs, CPA allows marketers to choose from various post-install in-app events, such as registration, app launch, and item purchase.
CPA is simply the price an advertiser pays a media source for each pre-determined action (purchase, registration, etc.) driven by that source.
You can calculate the eCPA, or effective cost per action, for a specific ad network by dividing the total cost incurred from that network by the total number of specified actions within a chosen time range.
This metric encompasses any campaign CPAs that you wish to track and gives an overall view of advertising costs at the media source level over time.
Why is CPA important?
CPA is one of four common pricing models in mobile marketing, alongside:
- CPM (cost per mille)
- CPC (cost per click)
- CPI (cost per install)
As marketers and their resources became more advanced, there was a demand for a pure performance model that allowed them to pay based on the desired end result.
Additionally, the CPA model enables media outlets to receive advertising budgets from performance marketers, who may have been hesitant to spend money on non-directly related advertising previously.
Pricing models evolved from the vanity-driven cost per mille (per thousand impressions) to cost per click and finally to cost per install, which is a significant step in the funnel but doesn't guarantee revenue generation. It's important to note that the majority of installers do not make purchases or become loyal users who generate ad revenue.
CPA provides a direct reflection of campaign profitability and reduces cost risk for marketers, making it a popular choice among available models.
However, CPA is only offered as a pricing option by networks on rare occasions. This is because the networks bear most of the risk associated with low conversion. Ad networks must buy ad space before users convert, and marketers must pay conversion costs.