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Cost per action (CPA) is calculated as the cost divided by the number of actions being measured. So, for example, if the spend is $150 on a campaign and the actions attributed to this campaign is 10, this would give the campaign a cost per action of $15.
It is a variant of the CPA (cost per action) model, where the advertiser pays the publisher and/or website owner in proportion to the number of actions committed by the readers or visitors to the website. [1] In many cases, it is impractical to track all the sales generated by an advertisement.
Various types of measurable action may be used in charging for performance-based advertising: Many Internet sites charge for advertising on a “CPM” (cost per thousand) or cost per impression basis. That is, the advertiser pays only when a consumer sees their advertisement.
Pay-per-click (PPC) has an advantage over cost-per-impression in that it conveys information about how effective the advertising was. Clicks are a way to measure attention and interest. If the main purpose of an ad is to generate a click, or more specifically drive traffic to a destination, then pay-per-click is the preferred metric.
The most common form or keyword advertising, focused on payment methods, is pay per click (PPC), with other forms being cost per action (CPA) or cost per mille (CPM). The first documented attempt at keyword advertising was 1996, by the search company OpenText , just a few years after the first attempt at banner advertisements.
In Cost per action campaigns (CPA), the advertiser typically pays for a completed sale involving a credit card transaction. CPA is all about 'now' – it focuses on driving consumers to buy at that exact moment. If a visitor to the website does not buy anything, there is no easy way to remarket to them. There are other important differentiators:
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Google beta-tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google). [2] In Q1 2014, Google earned US$3.4 billion ($13.6 billion annualized), or 22% of total revenue, through Google AdSense.
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