Cost per Action (CPA)

Definition:

The amount an advertiser pays for each desired action, such as a sale or lead

Example:

Let’s say a company is running an online advertising campaign for a new product. The desired action for this campaign is for customers to make a purchase on the company’s website. The company agrees to pay a CPA of $10 for each sale that results from the advertising campaign.

During the course of the campaign, the company spends $1,000 on advertising and generates 100 sales on their website. Since the company agreed to pay a CPA of $10 per sale, the total amount they owe to the advertising platform is $1,000 (100 sales x $10 CPA).

In this example, the Cost per Action (CPA) is $10, which is the amount the advertiser pays for each desired action (sale in this case). The CPA model allows advertisers to pay only for the specific actions they want their customers to take, rather than paying for clicks or impressions that may not result in the desired outcome.