Cost per action (CPA) is a performance-based pricing model in which a business pays a certain amount of money to the publisher for each specific action taken by a user after clicking on the ad. Some examples of action can include completing a purchase or filling out a form. CPA is often used in affiliate marketing and can be a more effective option for businesses as they only pay when a desired action is taken rather than paying for ad impressions or clicks. As a result, CPA campaigns can be used to drive conversions and increase revenue for a business, making it a popular choice for many marketers.
One of the main reasons CPA is so important to mobile marketers is that it allows them to measure the effectiveness of their mobile marketing campaigns in terms of actual user engagement and conversion. By only paying for specific actions taken by users, mobile marketers can better assess the ROI for their campaigns and make more informed decisions about where to allocate their marketing budget. Additionally, CPA can help mobile marketers identify which channels are most effective in driving conversions and which are not performing as well, allowing them to optimize their campaigns for better results.
CPA is also a valuable metric for mobile marketers because it empowers them to optimize their campaigns for specific goals. For example, if a mobile marketer wants to increase in-app purchases, they can use CPA to track how many users make purchases after clicking on an ad. Tracking CPA in cases like these allows mobile marketers to focus their efforts on the channels and strategies that are most likely to drive the specific actions they are trying to achieve.
Marketers can calculate CPA by dividing the total cost of a campaign by the number of actions users take as a result of that campaign. The formula for CPA is:
CPA = Total Cost of Campaign / Number of Actions
For example, if a business spends $500 on a mobile marketing campaign and 100 users make a purchase as a result of that campaign, the CPA would be $500/100 = $5.
It's important to note that CPA can be calculated for different types of actions, such as purchases, form submissions, and more. Therefore, when calculating CPA, it is essential to be specific about the type of action being measured.