Cost Per Action Marketing

Cost per action marketing is being touted as being much more beneficial than the tried and true cost per click advertising. Although cost per action or CPA as it is referred to is not a new method of marketing it has become quite popular. So what does it mean, how does it work and should I use it.

For an illustration consider a company wishing to expand their product sales. Traditionally they would develop an advertising campaign to have customers contact them for more information. Once they have the contact information the company can provide additional information and keep following up on the contact.

The company will keep track of the money spent on the advertising campaign and managing the campaign. Money spent on the campaign divided by the number of sales leads it produced will give a dollar figure of how much it costs to acquire a single lead. For example if the advertising campaign and managing the campaign cost $10,000 and the campaign produced a thousand leads the cost per lead would be $10.00. Conceivably then the company working through a cost per action marketing network could offer up to $10.00 per lead.

The fee is paid for an action taken on the part of the one inquiring about the product or service. This action could involve signing up for a newsletter, free report, more information or even purchasing the product. When the action is taken the company can now work the lead for about the same cost as before and maybe even less.

Wow! $10.00 an action, affiliate marketers could really make some money with that. Well yes and /or maybe. There is money to be made with cost per action marketing. Remember the company initially was spending money running and managing advertising campaigns to acquire leads. The affiliate marketer will have to do something like that to acquire leads. Affiliate marketers may have an advantage as this is what they do and they have developed marketing strategies that work for them. Although because of their expertise they will be able to minimize costs associated with acquiring the leads there will still be costs involved with setting up websites, providing a splash page, an effective sales page, and advertising expenses. Often the affiliate marketer will use pay per click (PPC) advertising to drive traffic to his lead capture page. If the cost of promoting your offer is less than the cost per action premium, then and only then have you made money.

If we compare cost per action marketing to cost per click marketing some of the differences stand out. Cost per click marketing say using adwords provides several alternative adverts to click. There are more chances of getting someones attention. Granted the revenue from clicking a cpc ad is much less than if an action is taken with a cpa ad. The cpa clicks are much harder to come by. It is important to give this some thought. The same effort should go into selecting a cost per action marketing niche as you would put into selecting a niche to market your product. Pitching your product to a niche where the people have a history of not spending any money will produce the same results no matter what you are promoting. If you are confident and feel you know what you need to do and feel that cost per action marketing is for you especially after you have done your homework then go for it.