SEO glossary: Cost per action (CPA)

What does Cost per Action (CPA) mean?

If advertising is placed on the Internet, a certain budget is available for this. The CPA value is calculated by dividing the total costs by the number of conversions or actions achieved.

 

This makes it much easier for advertisers to get an overview of costs. This tells them how effective certain advertising measures, ad types or advertising networks are.

 

The formula for calculating the cost per action is simple:

 

(total cost of a campaign) / (number of conversions = CPA)

 

Example:

(500 € advertising budget) / (300 leads) = 1.66 € per lead

 

The calculation of CPA is applied in various fields, industries and especially behaviors.

 

These include:

 

• Downloads of programs or PFDs
• Signups in a newsletter
• Sales of one product
• Contracting

 

 

When is a CPA good?

It is impossible to say in general terms when a CPA value is good. Factors such as target group, company and other values play a decisive role here. For example, the price of a product to be purchased is an important factor.

 

If an advertiser wants to sell high-priced products on the Internet, where long-term customer loyalty is common, the costs are usually much higher.

 

For smaller products such as digital info products, on the other hand, prices are lower. Accordingly, there is also the possibility of achieving interesting, low CPAs even with a small or medium advertising budget.

 

What are the advantages of CPA?

If the CPA remuneration method is chosen, this results in a transparent cost structure. This means that each action (conversion) achieved has a specific, agreed price. If an advertiser places ads, his risk is very low. The profitability, on the other hand, is much higher and better.

 

Is CPA an important factor in search engine optimization?

If advertisers use the CPA model on their website, it does not play an important role in connection with search engine optimization(SEO). This is because all visitors and potential prospects come from a paid search or advertising and have no organic search background.

 

Search engine optimization is only of importance to achieve good CONVERSION RATES to achieve. Because only in this way it is possible to generate an action from website visitors.