For affiliates launching advertising campaigns, achieving high conversion rates is the ultimate goal. However, various factors can contribute to lower conversion rates.
One critical element to consider is the way you pay for traffic.
This article delves into the advantages of the CPA (Cost Per Action) pricing model in an advertising network Galaksion and how it can be a solution to combat low conversions.
The different pricing models
Before diving into the specifics of the CPA pricing model, it’s essential to understand the common pricing models used in online advertising:
- CPC (Cost Per Click): This model involves paying for each click generated by an ad.
- CPM (Cost Per Mille): With this model, advertisers pay for every 1000 impressions of their ad.
- CPA (Cost Per Action): This model entails paying only when a specific action is taken by the user, such as visiting a website, subscribing to a newsletter, making a purchase, and more.
Understanding the CPA pricing model
CPA, or Cost Per Action, model refers to the price an advertiser pays for a single targeted user action. This action is determined at the launch of the advertising campaign and can encompass a wide range of activities, from website visits to app installations and product purchases. There are various subtypes of CPA, including CPI, CPL, CPS, and RS.
To plan your budget, you can also calculate the CPA metric itself by the formula:
CPA=Total Ad Spend / Total Conversions
For example if a campaign with a budget of $300 brings 120 conversions, the cost per conversion would be $2.5.
- Budget: $300
- Conversions: 120
- Cost per conversion = 300/120 = $2.5
The benefits of CPA
The CPA model is particularly advantageous because you only pay for conversions.
Clicks and impressions are essentially obtained at no additional cost, contributing to brand awareness and online presence.
This pricing model is highly profitable for mainstream offers in verticals such as e-commerce, utilities, nutra, apps, extensions, sweepstakes, games, VPN, dating, finance, music, and entertainment.
How does CPA work in practice?
CPA campaigns begin with a test phase.
You define a test budget to cover initial traffic costs.
After the test period, funds are charged from the regular balance based on the conversions generated.
The test budget is frozen in the balance until the test concludes, ensuring a minimum investment for Popup/Popunder campaigns ($20) and On-Page Notification or Push-Notification campaigns ($10).
If the test shows conversions at a competitive price and proves itself successful, a part or all of the budget is returned to the balance.
The average duration of the test is one week, but depending on the targeting settings of the particular campaign, the test may take less time — from one day to several hours.
- Test budget: $20
- Test cost: $5 (if the campaign does not generate any conversions, you will be charged for impressions)
- Budget payback: $15
After the test, the campaign continues to generate conversions, and money is charged from the general budget.
Understanding the CPA model vs CPA Goal
It’s crucial to differentiate between the CPA pricing model and the CPA Goal to avoid misunderstanding.
The CPA Goal setting focuses on optimizing CPM and CPC existing campaigns based on the cost per conversion. You choose the desired CPA, and the system automatically calculates how much traffic each zone will need to achieve the desired CPA, excluding the least effective zones without your involvement.
On the other hand, with the CPA model, you launch your campaign by choosing the CPA pricing model from scratch with a defined test budget. It covers traffic costs and allows the ad network to lead the campaign.
Fixing low conversions with CPA
If you’re experiencing low conversions with the CPM pricing model, switching to CPA can address several common issues:
- Traffic Source Selection
CPA often automatically selects relevant traffic sources based on your specified targets (such as vertical, GEO), ensuring testing on the right platforms.
- Creative/Pre-landers/Landings Optimization
The CPA model allows testing a wide range of creative solutions since you only pay for conversions, making it easier to find an effective approach. Tip: Optimize the weight of static elements on your landing pages and websites to ensure faster page loading, especially if you’re working in GEOs with slow content loading speeds.
- Difficulties in Data Analysis
Working with the CPM pricing model, it’s necessary to constantly monitor campaign results and analyze data to identify issues and improve performance. When you pay on a CPA, optimization based on targets and sources becomes more transparent, allowing for quicker calculation and adjustment of bids. After the test period results for a CPA model, it is easier to increase or decrease rates.
- Competitive Bidding
Calculating an appropriate CPM bid can be challenging initially. CPA streamlines the process and helps to avoid spending money on non-converting traffic.
- Budget Allocation
The CPA model allows one to set a goal for auto-optimization, resulting in a more precise distribution of the budget across sources compared to the CPM model. Additionally, if your offer involves delayed conversions, you’ll be acquiring traffic from a source until the conversion occurs. In the CPA model, a part of traffic is driven to each source, with the expectation of a conversion. Upon conversion, traffic is automatically resumed, greatly aiding budget optimization during the testing phase.
Maximizing Profit with CPA Campaigns
All the aforementioned facts about the CPA pricing model are different depending on the ad network but are true for Galaksion. In addition, there are more reasons why it’s easier to boost your conversions using the CPA model in this ad network.
The main feature of Galaksion is direct traffic. This means that they cooperate with trusted website owners and transmit their traffic directly to you — with NO bots and resell.
To optimize ROI and profit with CPA campaigns in Galaksion, remember these benefits and key strategies:
- Try Different Targeting Options: Experiment with various bundles out of 6 ad formats, 10+ verticals, and 245+ GEOs on Galaksion’s SSP Platform.
- Diversify your Creatives: Use the opportunity to test up to 10 creatives in one campaign and utilize Galaksion’s free tested creatives base for effective results.
- Experiment with CPA Rates: Adjust CPA rates to find the sweet spot for high-quality traffic. On Galaksion’s platform, there’s a traffic estimator to find the most suitable rates.
- Prioritize Optimization: Continuously analyze statistics, blacklist underperforming zones, and create tailored campaigns for successful zones.
- Engage with your Personal Manager: Leverage their expertise to gain insights and professional advice.
In conclusion, the CPA payment model offered by Galaksion is a powerful tool for affiliates seeking to boost conversions. By paying only for actual conversions, you can optimize your campaigns effectively and increase ROI.
Don’t delay, register in Galaksion with a promo code CPVLAB20 and set up your postback and campaign today to start reaping the benefits of the CPA model!
Author: Maria Sol from Galaksion