CPA stands for cost per action. This term is most commonly used in paid digital marketing campaigns. Marketers who want to optimize their ad campaigns for a specific user action, like sign-ups, add-to-carts, or purchases, will analyze the effectiveness of each campaign by the cost it takes to drive those user actions. It’s easy to calculate the cost per action—all you have to do is take the overall cost of the campaign and divide it by the amount of user actions.
Depending on the ad network, it’s possible to pay the ad network for the cost per action a user takes. While this sounds ideal, it is not always the most cost-effective solution for a marketer. If you pay an ad network by the cost per action, you’ll know exactly how much you’re paying per user action, making it easier to track the direct profitability of your marketing campaigns. This puts the risk on the ad network to acquire users to complete certain actions at an agreed-upon cost.
While the ad network maintains the risk, the downside of paying according to a cost per action model is that the ad network will retain the benefit if they perform well (i.e. if you agree to pay $10 for an action but it only costs the ad network $1 to drive that action, the ad network will benefit). This is why many marketers will still pay according to a CPC, CPI, or CPM model and do the math to see what is the most-effective way to pay the ad network based on their marketing goals.
Measuring the cost per action of a mobile advertising campaign specifically can be difficult. The brickwall of the Apple App Store and Android Google Play Store does not allow data to be passed through the mobile app install process, and the fragmentation that exists of the various mobile browsers on one device. Effectively, you can run into the issue losing attribution data through an app install browser and not being to able to see the cost per action of in-app events. This same issue can also occur on the mobile web, if a mobile user clicks on an ad in the Safari browser but completes his or her purchase elsewhere, like the Chrome browser or in the mobile app. Make sure to work with a mobile measurement partner, like Branch, who can help track the cost per action of your campaigns on desktop, the mobile web, your native mobile app, and other channels and platforms.
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