How is Cost Per Action Advertising Different from Pay Per Click and Do You Need it in Your Marketing Strategy?

There are a huge number of different ways to advertise on the web, and to the uninitiated the jargon can make it all seem a bit complex. You need to worry about your SEO, for one thing, which is applying techniques that help your site get a good ranking on Google and other search engines so more people find you ‘the natural way’ through searches. This can involve things like guest blogging, content marketing and keyword marketing. You then also need to think about any advertising you want to pay for on other websites or search engines, which can include things like banner ads on relevant sites, Facebook advertising and advertising on Google. When you get into this sort of advertising there are a huge range of options, including cost per impression, pay per click, and cost per action.

While pay per click and cost per impression tend to be fairly well known to advertisers, cost per action can be a bit more confusing because it can mean quite a lot of different things, and the name isn’t quite as self explanatory. Here, we take a look at what cost per action advertising means, how it differs from pay per click in real terms, and what you should consider if you are deciding whether or not to do it.

What Is Cost Per Action?

As you may or may not know, with cost per impression advertising, you pay for how many times your ad is loaded on a page that someone is looking at. You are basically paying for ‘eyeballs’. This makes it good if you aren’t at this point aiming for any kind of conversion, but want to get your brand name out there. It is also good if you aren’t really selling anything, for example if you are trying to build a following for a new blog that you might want to monetize later.

Pay per click is the next level up in terms of both cost and user commitment. You pay every time someone clicks on your ad, so rather than paying for eyeballs, you are paying for traffic to your website. This is also a good choice if you are trying to build up a site or brand, or if you already have a very good conversion rate once people arrive at your site.

Then we have cost per action. Cost per action is the most expensive option, but also the lowest risk. You pay the advertising publisher every time a certain action is completed, for example someone signs up for your newsletter, or makes an actual purchase. If you are paying for a non-revenue generating action like signing up to your mailing list, liking your Facebook page, or making a web inquiry, then you will pay a set fee agreed in advance of the campaign with the publisher. If you are paying based on sales, then it is usually a percentage of the sale value.

Can Anybody Get Cost Per Action Advertising?

As you might expect, cost per action companies like Click Booth don’t want to be publishing ads they don’t get paid for, so they do not want to offer cost per action campaigns to companies who don’t have a track record for converting customers. If you are a brand new business who has never made a sale, it is often seen as too risky for companies like Google to run these kinds of campaigns for you, so you’ll need to start with cost per impression or pay per click and work your way up as your ability to convert becomes more proven. Once you have cost per action available to you, it is a very good option to think about.

Is There Any Risk?

The only real risk with cost per action is if you are paying for a certain action that isn’t a sale – so paying for leads – and you don’t convert a lot of your leads. In this case you may end up paying more for your cost per action campaign than you actually make from any resulting sales. This isn’t a problem for every business as it may be that your long term strategy makes taking a hit on this campaign worth it for the leads, but is worth thinking about when you are deciding what to do.

Coat per action is growing a lot at the moment, especially now Google has entered the market, so it is good to at least understand what it is and how it works.

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