As we enter the Digital Marketing scene, conversion metrics start knocking on the door. If you're new to this, we can understand the confusion that intensifies with every new advertising acronym.
But just so you know, digital marketing is entirely different from traditional promotional practices. Consider this; when you're marketing on the Internet, you can track the numbers. And since you're able to do that, you have to have knowledge of the different metrics to make the most of the resources at your disposal.
And this is where pricing or cost models such as CPC, CPA, CPM, CPL, etc come into play. Today, we're going to talk about CPC and CPA and how they compare to one another in this dynamic and highly-competitive marketing environment.
What is CPA?
In digital marketing, CPA stands for Cost-per-Action. It is also known by the name Pay-per-Action (PPA). CPA is a more specific cost model as it entails an action that is, in some way or the other, related to a presumable conversion.
For instance, if you're using CPC, you would be paying for the number of times your ad was clicked. For a similar campaign, CPA would mean paying for a certain action (let's say "a signup") after the prospect has clicked through the ad and landed on your website.
We'd like to bring to your notice that the definition of an "action" in the CPA cost model is subjective. In other words, it can be anything from signup to a subscription to even conventional scrolling — all depending on the vision of the marketer and the sole purpose of running the ad.
What is CPC?
CPC is an initialism for Cost-per-click. It is also known by the name Pay-Per-Click (PPC). CPC is one of the most straightforward digital marketing cost models — marketers are required to cash in for each click on their ads.
According to Google, one has to bid for a Max CPC to have maximum chances of the ad ranking higher. However, that isn't the case always since a host of factors such as campaign quality, quality of traffic, landing page quality, etc matter for high SERP rankings.
CPA vs CPC
There's a massive debate as to which attribution model could yield the most preferable outcomes.
The difference of opinion and experience is a huge factor, but some contrasting aspects can help you make a better decision for your marketing endeavors.
CPA: The Publisher's Choice
The CPC lovers would disagree, but recent times have seen publishers heading elsewhere from the CPC model. A recent survey by the Performance Marketing Association revealed that almost 90% of the marketers were willing to shift from the CPC attribution model.
Why shift from CPC?
- CPC works well for top-of-funnel engagement; however, the same cannot be said for in-depth acquisition.
- CPC doesn't define the strategic value since the alliance of the vision, and the implementation of the ad remains blurry.
Why incline towards CPA?
- CPA is ideal for down-funnel engagement or for the purposes where customer acquisition is vital.
- The traffic is mostly credible even if it's not massive, thus increasing conversion chances.
Well, publishers prefer the CPA model because it's relatively easier to manage — you pay only for the user's action.
Should this mean CPA is always better than CPC?
Indeed, the most straightforward question with the most sophisticated answer. CPA might be a better option from a broad view, but that's not always the case.
You see, a lot depends on the quality of your campaign. For instance, Koddi switched from CPA to CPC a while ago to test the latter's performance.
Since the company's ad campaigns were spot on, they were able to scale the ROI by 165%. That's staggering, isn't it? But that's not it; they further lifted their efficiency by 51%.
So, what's the result of CPA vs CPC?
To be honest, there's no one winner. In fact, both can be adopted on a trial and error basis. Yes, CPA facilitates an increased chance of conversion, but it might not be as feasible as CPC when the campaign's quality score is high. To that end, we'd like to say — Always TEST before you make a decision. For every "action", you can calculate CPC and compare the efficiency of the two models.
Bonus Tip: Read a recent bannerTag's article on Google's automated bidding strategies.