Imagine a test where only correct answers count toward your score—or a tennis match that only counts the sets you win. Sounds good, doesn’t it?
Good news—that’s essentially how CPA marketing works.
CPA marketing can help your business increase sales, improve brand reputation, and maximize return on investment (ROI). Here’s how CPA marketing works, with seven implementation strategies. Plus, get expert tips from Jerrid Grimm, the co-founder of Pressboard and head of publisher marketing at the affiliate marketing platform Impact.
What is CPA marketing?
Cost-per-action (CPA) marketing (also called cost per acquisition marketing) is a type of affiliate marketing where an advertiser pays a publisher or content creator (“affiliate”) whenever they drive specific customer actions. For example, advertisers may pay when a customer purchases products, visits a landing page, or signs up for an email marketing newsletter thanks to an affiliate’s work.
Paying affiliates per action differs from other types of affiliate marketing, like influencer marketing, where a flat fee is paid for content creation, or revenue-sharing programs that provide ongoing profit percentages.
“Cost per acquisition marketing is a low-risk, high-reward model for ecommerce businesses,” says Jerrid Grimm, the co-founder of Pressboard and head of publisher marketing at the affiliate marketing platform Impact. “It’s the only marketing model that guarantees that a business only pays when it achieves real results, such as product sales.”
There are five main CPA affiliate marketing types:
- Cost-per-lead (CPL). CPL programs compensate affiliates for generating leads that meet the terms of your affiliate marketing agreement.
- Cost-per-click (CPC). CPC or pay-per-click (PPC) programs pay affiliates for clicks on their unique, trackable affiliate links. Affiliate links typically drive traffic to optimized landing pages on your website.
- Cost-per-sale (CPS). CPS programs pay affiliates for sales attributable to their actions. You can use a recurring revenue model to pay a fixed commission every time a customer purchases promoted products or a cost-per-acquisition model to make a one-time payment for the initial conversion.
- Cost-per-install (CPI). Your affiliate earns payment when a user downloads and installs your program. CPI models are popular with SaaS companies, like website and software developers.
- Cost-per-view (CPV). CPV programs pay affiliates for every view of an advertisement or piece of content, regardless of whether the views lead to clicks or conversions.
How does CPA marketing work?
Your business can run its own CPA marketing programs or partner with an affiliate network like Shopify Collabs or ShareASale. These CPA networks connect affiliate marketers with brands and help you recruit, manage, and pay affiliates. Here’s how CPA marketing works:
Decide on qualifying actions and terms
To start a CPA affiliate program, identify the actions you want to pay for—like a product purchase, newsletter signup, or account registration. Tie them to your larger digital marketing or strategic planning goals and have a clear budget for each successful conversion.
Create a CPA marketing agreement explaining the program terms, conditions, and compensation. If you’re partnering with a CPA network, you might be able to use the network’s agreement or customize a template.
Find affiliates
Recruit affiliates by joining an affiliate network or promoting your CPA program through social media, email marketing, and website promotions. Review applicants, admit those who fit with your brand, and have accepted affiliates sign your CPA marketing agreement.
Many affiliate networks prescreen applicants and offer an auto-joining option, letting you automatically admit and onboard interested affiliates.
Distribute links and pay
Create CPA affiliate links using your affiliate management app or tool. These unique, trackable links let you attribute specific customer actions to the affiliate’s activities. Shopify users can create personalized links and codes with Shopify Collabs.
Distribute affiliate links to your marketers to promote on social media, in product review blog posts, or through email marketing. Use conversion data to track conversions and pay affiliates according to the terms outlined in your CPA marketing agreement.
CPA marketing dos
- Set goals and KPIs
- Use strategic CPA offers
- Offer unique incentives for top partners
- Establish good communication practices
- Find a CPA network
Here are a few tips to make the most of your CPA marketing program:
Set goals and KPIs
Set goals for your CPA marketing campaign, laddering up to your overall business goals. Align your campaign goals with key performance indicators (KPIs), or the metrics you’ll track to evaluate campaign performance.
For example, if one of your goals is to improve brand awareness, you might set a CPA marketing goal of increasing traffic to your website by 15% in Q4. You’d then track total site visitors and reward affiliate marketers when they drive traffic to your site.
Consider your budget, too. Since CPA marketing is performance-based, you only owe money if a customer takes a desired action. If affiliates are unsuccessful, your program won’t cost much—but if they’re highly successful, your expenses could increase significantly. Ensure a positive return on investment by choosing actions directly driving business revenue, like purchases.
Use strategic CPA offers
As you set your CPA offers, Jerrid recommends understanding your average order value (AOV) and customer lifetime value (CLV).
“If your product is a high-margin but infrequent purchase, such as jewelry or a mattress, consider offering an attractive commission on the initial purchase to your referral partners,” he says.
Higher commissions incentivize affiliates to pursue these conversions, making it a worthwhile promotion if your product margins support it.
When your average order value is a small percentage of your customer lifetime value, Jerrid recommends a recurring payment model.
“If your product is a subscription product … consider offering a recurring commission for as long as the customer continues to subscribe to your product,” he says. “This encourages your partner to promote your products to the most qualified potential customers who are least likely to churn.”
Offer unique incentives for top partners
Many CPA marketing programs offer discount codes or other incentives to help affiliate marketers attract interest, generate leads, and boost their conversion rate. Jerrid recommends distributing high-value discounts to your affiliate marketers—beyond those you make available to the general public.
“Your CPA marketing partners have loyal and engaged audiences,” he says, “and you have the opportunity to convert those audiences into long-term customers of your business. Help your partners promote your products and services to their audience in a way that makes them feel appreciated.”
He suggests including a special discount, free offer with purchase, or limited-run product release to stand out.
Establish good communication practices
Affiliate relationships are a win-win: More effective affiliate marketers earn more and generate more business for you. Jerrid recommends setting them up for success by establishing clear lines of communication and providing regular product updates. Consider assisting with tech issues and sharing brand collateral for affiliate use. You can also help affiliates build skills by collaborating on marketing efforts.
"Don’t forget to celebrate your partner’s success," he adds. "A little recognition goes a long way in boosting morale and fostering a sense of camaraderie."
Find a CPA network
The right CPA network can save you time and maximize the return on your affiliate marketing efforts. A strong network helps you recruit and manage high-quality affiliates, monitor their performance, and optimize your CPA campaigns.
Some CPA networks pair you with your own affiliate manager who represents your business to affiliate partners, manages onboarding and payment, and advises your CPA marketing strategy.
CPA marketing don’ts
Increase your chances of earning a high ROI on affiliate marketing campaigns and protect your business from bad actors by avoiding these common pitfalls:
Running on autopilot
CPA marketing can be relatively hands-off—especially if you partner with a reputable affiliate network. But don’t set it and forget it. Monitor key metrics and find opportunities to improve campaign performance. Your ideal metrics depend on your goals, but pay attention to data like total affiliate sales, sales per affiliate, gross margin, and number of new, returning, or dropped affiliates.
“CPA marketing is a powerful way to increase your business’s awareness and sales, and it deserves your attention,” Jerrid says. “Optimizing your program, partner mix, and tracking business outcomes is essential to growing your CPA marketing.”
Using a shady CPA network
Reputable CPA networks can save time, decrease costs, and boost returns on your CPA marketing program—but shady networks can do the opposite. Less credible networks can undermine your efforts by using low-quality publishers, delaying payments, or inflating conversion rates.
Don’t join the first affiliate network you come across. Take time to research your options, comparing pricing, features, and support. Ask a potential affiliate network partner to provide customer testimonials or case studies to demonstrate program performance.
CPA marketing FAQ
What are CPA marketing networks?
A CPA network (or affiliate network) is a service connecting businesses with content creators or publishers. A good CPA network helps you run an effective CPA marketing program by recruiting, vetting, and managing affiliates.
What are the benefits of CPA marketing?
Here are three benefits of CPA marketing:
- Low-risk. Under a CPA model, an advertiser pays only when a consumer takes a desired action (e.g., a customer purchases the advertiser’s product or visits a particular landing page on affiliate sites).
- Cost-effective.CPA affiliate marketing can deliver a high ROI if the set action generates revenue.
- Flexible. The CPA model allows businesses to choose goals, such as driving traffic to a specific landing page, earning new clients, increasing average order value (AOV), etc.
Are there drawbacks to using CPA marketing?
Here are a few drawbacks of CPA affiliate marketing:
- Risk of fraud. CPA marketing fraud is common, and shady CPA networks can exploit advertisers and affiliates.
- High competition. The CPA marketing space is crowded, making it difficult for businesses to find high-quality affiliate marketers and tricky for affiliate marketers to capture audiences.
- Requires customer insight. CPA marketing is most effective when businesses understand how customers convert. If you pay an affiliate marketer for an action that doesn’t impact conversion rates, you could end up losing money.
