CPA, CPC, CPM, What Does it All Mean?
By Stephen Bucaro
CPA, CPC, and CPM are all methods that Web businesses and affiliate programs use
to pay for advertising and sales commission, and how Webmasters earn money from their
websites and web marketing. In this article, I explain these three different methods
and, depending upon whether you're on the paying end or the receiving end, which one
is best for you.
CPA
CPA stands for "Cost Per Action". In order for a webmaster to receive a commission,
a visitor must click on a link on the Webmaster's site that takes the visitor to
the affiliate program's site, and the visitor must complete an action on that site.
Usually, the action is to make a purchase, but it might be to provide a valid email
address, to fill out a form, or to take a survey. If the action is one of the latter,
it may be referred to as CPL (cost per lead).
CPA is great for the business or affiliate program because they don't have to pay
a thing until a sale is made. CPA is not so great for the webmaster because, despite
putting in lots of hard marketing work and providing a massive number of impressions,
there may be few or no actions completed by visitors.
With CPA, the affiliate program doesn't need to make much of an effort in their ad
copy writing, banner design, or tracking. Affiliate programs use several methods to track
which site referred the customer, including the HTTP referer, cookies, and the URL
query String. But all of these methods are unreliable.
The HTTP referer is the URL of the webpage, placed in the HTTP header by the
browser and sent to the Web server to allow it to identify where visitors came from.
Referer is a misspelling of the word referrer that made it into the HTTP protocol specification.
The URL query string is a method where the affiliate member's ID number is
attached to the end of the affiliate program's web address in a link.
The main problem is that users don't usually buy on the first visit. They may
save the affiliate program's URL and return later to buy. That means the HTTP
referer data is invalid, and the cookie may have expired, and query string may be
gone. Many users have their cookies disabled, and don't include the query string
when they return to to the affiliate program's website later.
The affiliate program doesn't need to worry about tracking reliability because if
the tracking information is gone, the affiliate program gets to keep all the commission.
Many affiliate programs require the visitor to return within a certain time period,
usually 24 hours, or the commission is considered fair game for the affiliate program to steal.
CPA is a bad deal for Webmasters. So should webmasters never use affiliate programs
that pay CPA? Not necessarily. If the affiliate program has accurate tracking,
a Webmaster can still make good money from a CPA program. The secret is to NOT use
the affiliate programs banners and ad copy. Design your own more effective banners
and write your own more convincing ad copy.
To create good advertising media, don't write "advertisements", write "reviews" and
"how-to articles" containing affiliate links.
Note that many affiliate programs don't permit you to create your own advertising
media because you may exaggerate or misrepresent the product. You're required to
use the advertising media provided by the affiliate program. But most CPA affiliate
programs don't enforce this rule. In reality the rule is just for their legal protection.
If your site has a focused topic and you use only advertising that is closely related
to that topic, and you create your own advertising media, and the affiliate program has
accurate tracking, you can make good money from a CPA program.
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