Wanna learn more about the CPA mobile ecosystem and make money with CPA offers? Start reading!
Everyone who’s reading this will probably agree with me when I state the following: CPA is a broad concept, probably as broad as marketing itself.
Understanding what CPA is all about can be quite tricky and that’s why I’m here: to clarify things for you guys.
I want you to know exactly what Cost Per Acquisition is all about!
I promise that, by the end of this article, you’ll have a great notion of CPA offers and how the whole ecosystem works.
Today, I shall explain what an action is, the kind of actions, the meaning of user, publisher, advertiser, network, and carrier!
Let’s start our journey!
CPA Mobile: Broad Concept
CPA stands for cost-per-acquisition or action.
What’s an action?
What’s an acquisition?
Does it imply an actual cost? And who pays for it?
This is it, guys!
This is that point where everyone’s heads start imploding, teeming with several unanswered questions.
Don’t worry, though.
That’s why I’m here: to clarify and demystify these complex concepts in the following paragraphs, deconstructing every piece of this overwhelming puzzle.
What’s an Action in Affiliate Marketing?
In the Cost per Acquisition (CPA) online advertising price model, an action means the user has to perform a specific task such as a sale or a click.
It’s not enough for the user to view an advertisement or to click it, as it occurs with CPM and CPC, correspondingly.
The user needs to acquire, to have an intention, to be interested.
This is how you make money with CPA offers!
Is it more difficult to attract users and galvanize them so they get something? Well, the answer is yes!
Even so, in the end, isn’t that what every company wants?
To sale, to increase the client database, to boost those super sweet revenues?
The only difference between CPA and other pricing models such as CPM or CPC?
The means to achieve the ultimate goal – the conversion.
Kinds of Actions
It really depends!
By the way, this last sentence is like a mantra in marketing.
The most common types of actions are definitely subscriptions: the user pays an amount to get a product or a service during a specific period of time.
For those actions, the advertiser – the owner of the offer – pays an average amount of revenue per user.
This means that the CPA can be the same for a user who remains associated to the subscription service for three weeks or for one who only stays for one quick week.
It’s an estimation and an average number, since we can never guess each user’s actual behavior.
However, an action doesn’t only refer to a cost.
CPL – Cost Per Lead – is a similar pricing.
Ever been able to check those viral sweepstakes offers in the form of a contest where the user only needs to fill some data to fire a pixel, and a conversion?
That’s referred to as a lead: a user who is a potential client.
Now you’re asking: how can an advertiser make money by paying per lead, and receive no payment whatsoever from the user?
Now, this is where the beautiful essence of marketing becomes real.
CPL offers are a way for the advertisers to build a database of interested users and to later sell them paid products.
Remember… at the end, this is the goal of each company.
But do advertisers manage to turn all the leads into real clients? Hell no!
Since the user only needs to insert some data, the conversion rate is really high, when compared with the normal subscription services.
However, the payouts are low, because only a small sample of users can be monetized.
Want to learn about another pretty common action? A sale!
This is when the user actually acquires a product or a service at one go, and not as a recurrent payment.
This is known as CPS – Cost per Sale.
This means the users pay for the product or service they acquire, so the payout the advertiser will assign is higher, but the conversion rate is lower, since the user needs to clearly spend money, usually via credit card.
Therefore, a subscription, a lead or a sale, can all be considered as actions. Sometimes you may get confused in the game, since ACTIONS are quite the broad term used for every occasion.
Even so, when we refer to CPA offers in mobile content, the idea of subscription comes to mind!
Comfortable with these terms and concepts?
Let’s now look at the players in the puzzle.
CPA Game – The Players
We’ve already mentioned users and advertisers in this CPA training.
Are these fellows the only members participating in this mobile ecosystem?
Starting from the beginning is the best way to find out!
Yes, just like a story: the story of an action.
Once upon a time…
A user was navigating on their mobile device, checking their favorite content or the latest news.
Just as it happens every single day, they access a web page and see an advertisement.
They’re a potential client for a specific type of product and they’re lured into acquiring it.
Who inserted the ad or set of ads in that webpage? The publisher.
The owner of the website was able to identify the type of user.
Then, they decided to show them the best ads – the ones with a higher probability to convert.
Now let’s go back to the user’s journey.
They’ve viewed the advertisement and it looked appealing.
Therefore, they reacted by clicking and being redirected to an offer.
This offer was implemented and designed by the advertiser.
It kind of blends with the ad and – most of the times – with the website’s layout.
Did the advertiser work directly with the publisher so that this alignment could be possible?
No! It was in this window of opportunity that the affiliate had a chance to shine.
Indeed, in that specific moment, the affiliate showed the offer they thought best suited the potential user’s wishes.
This means the user entered the offer, saw the content and decided to acquire the product through their mobile phone.
They didn’t need to make a bank transfer afterwards or to call a specific number to confirm the purchase.
By accepting it on the offer page, the carrier was able to charge the user directly and get them to pay.
The user was pleased with the product and the price they paid, and lived happily ever after – or until the next action.
The CPA mobile ecosystem is impressive… and at the end, who paid for the product?
To whom? To the carrier.
And what about the other players?
What happens in this world is that the carrier distributes the price the user pays by giving a commission to the advertiser, who pays a commission to the affiliate network, who then pays a commission to the publisher.
The story I’ve so brilliantly told you is a very short story of a user’s action.
Now you can try to imagine these players increasing in number.
I’m referring to those awfully big agencies or networks, which actually provide complementary services and get part of the commission.
The product needs to be really good so the user pays more for it.
And how can we optimize this route?
How can each player be responsible for adding value to the chain?
How can we only have happy clients?
Let’s pretend we’re playing the part of each player and trying to understand what’s more important for them.
If I’m a user, I’m the one that actually brings money to the table.
I’m the most important piece of this ecosystem since I’ll be tempted to buy the best type of products/services – the ones that best serve my interests.
However, not all stories end with a smile.
Sometimes, I can be subjected to ads that aren’t related with the final product, or products that aren’t real, or services that I struggle to unsubscribe from.
I can subscribe to them once, but I won’t do it again.
But there’s one thing I can guarantee you: if the product is really good – even if it’s more expensive – I’ll be willing to pay some more.
By paying more, I’m already adding value to the chain.
Give me good products, please!
If I’m a publisher, I just want to monetize my traffic.
I provide the space, but I want money in return.
I wanna pay less for my traffic while receiving the highest revenue possible.
I’m looking for the best-converting offers and the cheapest traffic.
I’m focused on finding good affiliate networks that can provide me suggestions on how to monetize traffic in a more profitable way and help me find those saucy gold mines that have almost no competition at all.
Related Content: Trail the Unexplored Path – Explore Gold Mines
On top of that – if I can provide the best traffic to those awesome offers – I’ll know users will be interested and super happy with the product!
If I’m an affiliate network, I’m focused on making the best combination of traffic and offers, by providing quality traffic and negotiating the best offers with the best payouts in the market.
If I have global offers with a high performance, an interesting pool of publishers and advertisers, publishers who send quality traffic and advertisers who pay on time, I won’t have anything to complain about.
If I’m an advertiser, I’m only focused on getting a high volume of users acquiring my products and staying in the service as long as humanly possible.
Even so, I have to make good estimations, as I can’t give a higher CPA to the publishers than the real value of the actual user.
Plus: if I create good, innovative and interesting products for my users, I can make them pay more and add value to the ecosystem.
If I’m a carrier, I’m looking to monetize my current client database.
By providing Value Added Services (VAS).
Not just any service, but the ones that are interesting for the user, the player that will really pay for it, the one who generates that saucy money.
This means I need to make sure I charge the user correctly.
I also need to be certain that I actually comply with the rules and regulations of the market.
Otherwise, I’ll be assaulted by fines and complaints when users finally realize the product isn’t what they were expecting.
In conclusion, the market offers an array of different ways for you to acquire users, even those who aren’t really interested in that specific product or service.
Nevertheless, that’s just unsustainable in the long run.
In fact, for a user to be happy, the CPA mobile ecosystem needs to be able to provide good, innovative, cheap and interesting products or services.
Why? Because, in the end, that’s where the gold mine is hidden in CPA Advertising!
Enjoyed this CPA training?
Let me know your thoughts on the comment section below!
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Helena - APAC Expert