Cost Per Action (CPA)

Cost Per Action (CPA) is a relatively low-risk Internet Marketing pricing model for online advertising. With the Cost Per Action plan, the company paying for advertising (the client company) only pays the advertising company for advertising services when a specified desirable "action" takes place. The "action" usually has something to do with getting new customers (or leads to get new customers), or making new sales.  as a direct result of the advertisement.

With CPA, the client company will pay a set amount for each customer who takes a certain action as a result of an online advertisement. This is a variation on the Pay Per Click or Cost Per Click online advertising pricing model.

The "action" that warrants payment by the client company could be anything that moves the potential customer closer to making a purchase: i.e. signing up for an email newsletter mailing list, filling out a request for a quote form, or purchasing a product online.

The "action" is determined by the client company and the advertising service together, prior to starting the ad campaign. They also negotiate a customized payment rate that the client company will pay the advertising company for each customer "action." This advertising payment plan 

Cost Per Action is also known as CPA, Cost Per Acquisition, Pay Per Action, or PPA. It is sometimes confused with Cost Per Lead (or CPL) advertising pricing models; however, the information gained from CPL advertising is usually basic contact information (sometimes just a potential customer's email address), while the information from a CPA advertising model is usually much more detailed, and oftentimes a sale must be made before a company is charged for the advertising.

Successful examples of Cost Per Action include eBay's AdContext and Jellyfish.com. Google AdWords offered Cost Per Action ad pricing from 2007-2008, but discontinued it in favor of DoubleClick Digital Marketing.