The Ultimate CPA Guide...

MARKETINGCPATheUltimateCostPerAcquisitionGuideforB2CMarketers

Contents 01 Introduction 02 How Does Affiliate Marketing Work? 04 Spotify Case Study 05 Defining Your Audience for a Customer Acquisition Campaign 07 Selecting Your CPA Pricing Model 10 CPA Pricing Model At A Glance 11 Choosing an Affiliate Network or Affiliate Agency 13 Measuring Success: CPA KPIs 14 Diagnosing Underperforming KPIs 16 Long Term Success in Affiliate Marketing 19 Expert Tips To Get Started in CPA Marketing 20 Selecting an Affiliate Marketing Agency 21 CPA Marketing Next Steps = Bonus Content

Though digital marketing opportunities are constantly coming, going, pivoting, and changing, there’s one strategy that has consistently proven its worth to ROI-minded marketers - and that’s Cost Per Action (CPA) marketing. CPA marketing, and more broadly affiliate and performance marketing, have proven to be successful models for B2C marketers that are ready to move beyond awareness campaigns and into a customer acquisition strategy. With CPA marketing, an advertiser only pays after a user has completed a desired action that you have pre-determined. Whether you have goals higher in the customer acquisition funnel, like promoting trial sign-ups or lead form submissions, or lower-funnel goals like increased sales or mobile app installs, CPA marketing provides a scalable and ROIpositive model for achieving your desired results.

US affiliate marketing spend estimated to hit $8.2 billion by 2022 of marketers stated that paid advertising is ‘very important’ or ‘extremely important’ to their overall marketing strategy

This guide will give you the background on CPA marketing, the decisions you must make to get started, and help you build the foundation of your strategy.

Over 1/3 of marketers feel affiliate marketing is one of the strongest forms of acquiring new customers

68%

If at any time you need a quick refresher on CPA Marketing terms, check out our industry term glossary here!

$8.2B 68%

Over 31

Introduction

Affiliate marketing is the process by which an affiliate earns a commission by driving traffic to a marketer’s product or service. Affiliate marketing is known as a type of performance-based marketing, as a marketer only pays when there are genuine, measurable results.

What is CPA Marketing?

Affiliate marketing definition

How Does Affiliate Marketing Work?

Cost Per Action (CPA) Marketing is a marketing model in which a commission is paid when a user takes a specified action. It is also referred to as Cost Per Acquisition Marketing. Actions (or acquisitions) include a wide range of options for the marketer, including everything from clicks, to form fills, installs, purchases, and more. CPA marketing is also a broad term that encompasses numerous other Cost-Per pricing models, including CPS, CPL, CPI, CPE, and CPC.

Pro Tip:

Marketing Terms You

Additional

Performance marketing definition

Performance marketing is an umbrella term that encompasses any kind of marketing that is performance-based. More granularly, performance-based marketing refers to marketing programs in which marketers (a.k.a. advertisers, brands, retailers, or merchants) pay affiliates (a.k.a. publishers or partners) either directly, or via a performance marketing network or agency when a specific action is completed. To help differentiate from other marketing tactics, just remember that with performance marketing, you only pay when your desired action is completed (sale, lead capture, etc.). If there isn’t performance, you don’t pay. CPA Should Know An affiliate, also known as a partner or publisher, is a third-party individual or company that promotes another company’s product or service in return for a commission, and can exist anywhere along the performance marketing funnel. Apply to be a Perform[cb] Affiliate. Advertiser: Also referred to as a marketer, brand, or retailer, an advertiser has a product or service to promote or sell. Advertisers utilizing CPA marketing have defined customer acquisition goals with a focus on metrics and continued campaign optimizations. Apply to be a Perform[cb] Advertiser.

Affiliate:

With a scheduled Super Bowl ad in place, Spotify was looking for a way to increase their online and mobile presence in tandem with the airing of the ad, and in the days following to capitalize on the increase in consumer interest. Perform[cb] scheduled large media buys with top affiliate partners to deliver a significant traffic burst in sync with the Super Bowl weekend, as well as the days following the event. In return, Spotify saw a 532% increase in installs. Spotify was able to capitalize on the increase in traffic from their advertisement thanks to CPA marketing’s quick scalability and efficient targeting. Check out the case study here. Spotify Leveraged CPA Marketing To Increase Their Visibility During The Super Bowl

How

Pro Tip: Entertainment apps like Spotify utilize CPA networks to find and partner with affiliates to drive traffic bursts. Interested in being a marketer with Perform[cb]? Learn more here.

Defining Your

A hallmark of CPA marketing is its consumer targetability so you need to have a clear understanding of which consumers you would like to reach.

B2C Target Market

Your target market is the group of consumers or users you want to reach with your marketing message. This is the audience you’ve identified as most likely to purchase your product or service. From an overall marketing perspective, it is important to fully understand your customers and their journey, including demographics and behaviors. However, with performance marketing, you only pay for conversions, so the most important metric to understand is CLV, or customer lifetime value CLV is defined as the total worth of a customer over the entirety of their relationship with your business. CLV is notable because it helps measure customer loyalty and satisfaction in a way that tangibly links to revenue. Over time, your customer lifetime value data becomes extremely powerful. When CLV is high, it will tell you where to continue pushing your efforts. If its low, it may well be a sign that it is time to reevaluate the products and affiliates you work with. CLV combined with performance marketing can be a powerful duo because the flexibility of performance marketing allows you to easily adjust pricing to directly impact CLV. Audience for a Customer Acquisition Campaign

Before delving into any marketing opportunity, a clear understanding of who you’re targeting is necessary for strategy creation. Without knowing your audience, you will spend more time and money on your marketing efforts while receiving poorer results.

• What traffic channels are going to be the most relevant to reach them?

• What locations are you targeting? Do you have geographic limitations or goals?

• What does your current customer base look like? Do any qualities stand out for your top converting customers?

Its also helpful to fully understand the competitive landscape for your products or services.

• What device types are they most likely to use?

Some good questions to ask in order to define this landscape include:

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• What differentiates your product or service from the competition?

• Who is your competition, and what are they doing to drive acquisition? Does it appear to be working?

• Who are your competitors targeting? CPA Targetability Example: Leveraging Affiliates Who Performed Well on Competing Apps

Once you’ve defined your target audience and understand your competition, you can analyze which CPA marketing pricing model makes the most sense for your goals. With your target market in mind, you can then adjust payouts based on Customer Lifetime Value. Even though you only pay for conversions with performance marketing, the more defined your target audience, the more efficient your marketing efforts will be, and the faster you will achieve ROI. Pro Tip: Other helpful things to know about your ideal audience to maximize your performance marketing efforts include:

While in some instances paying for views or impressions is still appropriate, the majority of performance marketers find themselves considering these common pricing models: CPA, CPI, CPE, CPL, CPS and CPC.

CPA marketing encompasses numerous other customer acquisition pricing models.

Which

Use?

Pricing Model Should

The CPA pricing model allows advertisers a bit more assurance that what they’re paying for actually ends up as quantifiable consumer engagement. So, in this sense, the advertiser isn’t risking as much with their money as they know exactly what each action or sale will cost them.

Selecting Your CPA Pricing Model

CPA - Cost per Action/Acquisition

Today’s digital marketers have more options for user acquisition at their fingertips than ever before. Long gone are the days when you were limited to choosing between paying for views, impressions or clicks, as today’s performance marketing world has evolved into one of endless opportunity. CPA You

A style of performance marketing in which marketers or advertisers only pay partners or affiliates when a new user is acquired or a specific action is completed. An action can be anything from a form fill, to a subscription, a download, a purchase, etc., as agreed upon by the marketer.

Pro Tip:

CPI - Cost per Install Specific to mobile apps, this pricing model pays publishers when a user installs and opens an app. It is one of the most widely used models for mobile user acquisition campaigns.

CPS - Cost per Sale A pricing model that pays affiliates when a customer purchases a product or service at full cost, or via cash-on-delivery. With this model, the advertiser only pays when revenue is driven.

CPL - Cost per Lead This pricing model pays when a user has provided personal details as stipulated by the marketer. Common personal details collected include name, email, and/or zip code. With this model, lead generation is the desired goal.

This is one of the lowest-risk media buys on the part of the advertiser, making it a highly popular performance marketing model.

CPL is common in B2B marketing, where it is unlikely that someone will make a purchase immediately. This model is great for acquiring a database of qualified contacts interested in certain products or services with which the advertiser can interact afterwards.

It is an appropriate model to build lists of powerful records. Or, even, to create member acquisition programs with lead nurturing strategies. You can use this CPA pricing model when you want to generate leads, like QuoteWizard, who saw a 92,000% increase in leads.

One of the most straightforward pricing models, CPC pays when a user has clicked on an ad and has been redirected to the marketer’s desired landing page.

If you’re looking for CPI or CPE, make sure that you have a mobile attribution platform in place before applying to a network. An attribution platform tracks where your users are coming from and the conversion actions they’ve taken, then aggregates the information. Pro Tip:

Across the performance marketing industry, CPE is often used for postinstallation events within mobile apps. At Perform[cb], this model pays when a user has completed an action within an app after install, which can include events such as a registration or in-app purchase. While some networks will use CPE more broadly, this model is only applicable to app-install offers at Perform[cb].

CPC - Cost per Click

CPE - Cost per Engagement

10© 2020 Perform[cb] CPA Pricing Model At A Glance TOP CONSIDERATIONS OTHER CONSIDERATIONS CPS Low risk because you only pay when revenue is driven May hear this name used interchangeably with the term CPA in the performance industry CPL Good way to build a database of qualified leads, with the ability to specify what data is captured about the leads Common in B2B marketing CPI Fast way to drive installs Specific to mobile apps CPE Ability to be highly targeted based on engagement specified, increasing ability to control quality of leads Usually specific to mobile apps, but can vary by network CPC Fast way to drive traffic Oldest and therefore most common CPA model Your quick guide to choosing the best CPA models for your marketing goals

There are several factors that go into choosing an affiliate network and those factors can shift depending on the marketer’s goals. However, the four primary factors that go into every marketer’s decision are distribution, technology, compliance, and payment. Read more about these factors and the questions you need to be asking here!

Perform[cb] has been recognized as the #1 CPA Network Worldwide for 4 consecutive years.

What is an Affiliate Agency?

an Affiliate Network or Affiliate Agency

An affiliate marketing agency manages affiliate promotions, sign-ups, payouts and affiliate relationships on behalf of a marketer. You may also see affiliate marketing agencies classified as affiliate OPMs, or outsourced program management providers.

What is a CPA Affiliate Network?

How to Choose an Affiliate Network?

Look for a network that has longevity and good reviews from both marketers and partners, or advertisers and affiliates. Pro Tip:

An affiliate network is a company that connects marketers (brands or their agency representatives) with affiliates to promote the brand’s goods or services to consumers or customers on a pay-perresults model. A CPA affiliate network is an affiliate network that uses any combination of the CPA pricing models as a means of payment for an action.

Choosing

How to Choose an Affiliate Marketing Agency?

Many marketers initially set out to manage their own affiliate program, but quickly learn that an agency with vast industry experience will be more effective. A reputable agency should be willing to review your program and provide you with strategic recommendations as to how they can help you help it grow.

Choosing an agency to manage your affiliate program can be easy if you focus on these three factors: their strategy, affiliate relationships, and reporting & data analysis. Does the agency offer your brand a flexible and proactive affiliate program strategy that is customized to your needs? Do they have quality publisher/affiliate relationships with proof to back their claims? What tools and processes do they use to provide insightful reporting? Will they work as an extension of your internal team to help hit your KPIs? Read more about these factors and the questions you should be asking here!

Pro Tip: Want to learn more about the agency services Perform[cb] marketers receive? Find out here.

In terms of CPA marketing, incremental sales are conversions (orders, installs, subscriptions, etc.) that would have not been achieved if the specific marketing or promotional activity had not taken place.

The average order value can be used to help measure the average revenue per order. It is also an important metric for comparing your CPA marketing to your other marketing methods.

Measuring Performance Marketing Results Key Performance Indicators (KPIs) to Consider: Measuring Success: CPA KPIs

Incremental Sales

The rate at which sales are generated or leads are acquired after a click on an advertisement. The CR helps show the overall effectiveness of your CPA promotional methods as well as the quality of the user experience.

Conversion Rate (CR)

Return on Investment (ROI)/Return on Ad Spend (ROAS)

Reversal Rate

To get the most of your CPA marketing program, its important to set forth clear KPIs and measure their performance. By tracking and measuring key metrics, you can determine your CPA program’s level of success.

Average Order Value/Average Order Size (AOV/AOS)

Also known as a chargeback rate, this is your gross sales vs. net sales number. If there’s a high reversed sales rate, it could indicate that your brand or service is not being represented correctly to your target audience.

These calculations assess the overall effectiveness of your CPA marketing campaigns. They compare how much you spend to how much revenue you generate from that spend.

Low Incremental Sales

• Reduce the barrier to entry: Ask yourself: Am I asking too much? Sometimes we get greedy with the data we’re collecting or over complicate things. Reduce the number of pages, text, and form fields a lead has to fill to be a customer.

• Use seasonality: Are you incentivizing affiliates to promote specific products during times of the year that consumers are looking to purchase the product? Not capitalizing on seasonality is a big miss, as this is an easy way to get timely, relevant offers in front of your audience.

• Think about channel differences: Are you treating your affiliate marketing efforts different from your traditional marketing ones? Consider how leads coming in from affiliate sources might be different than the leads coming in from other sources like paid search ads or social media. Are these leads as familiar with your brand? Are they at the same stage of the funnel? If not, make sure you optimize your assets to align with those things.

Ensure that your supply chain or customer support team can be scaled quickly once momentum has begun. Things can take off quickly with affiliate marketing and you don’t want to risk brand reputation by not being able to fill orders or follow up on leads.

Low Average Order Value/Average Order Size (AOV/AOS)

targeting: Ask yourself: Am I putting the right message out to the right audience in the right format?

Diagnosing Underperforming KPIs Low Conversion Rate (CR)

Pro Tip:

• Consider your package: Does your affiliate marketing collateral align with the number of products you want to sell? If you want higher order values, consider equipping affiliates with upsell opportunities that they can promote.

• Look at things like ad copy, creative, landing page quality, forms, and

Representation: Is your brand or service being represented correctly to your target audience? If your message isn’t resonating, take a step back and make sure people are clear on what to expect after interacting with your ads.

Keep in mind: World events may require you to pivot your KPIs. Make sure your marketing plan is prepared

• A/B test: Test different products and offers frequently. However, don’t over-invest budget on experiments. Experiments should have a clear goal and be extremely focused on improving elements aligned with improving conversions.

•

Low Return on Investment (ROI)/Return on Ad Spend (ROAS)

• Follow the data: Optimize based on data values. Avoid basing campaign improvements on vanity metrics and focus on metrics that correlate with your goals. For example, if you’re looking to drive conversions, use engagement and CTR, not likes and views.

High Reversal Rate

Long Term Benefits of Affiliate Marketing Only Pay for Conversions

The roster of affiliate marketers available through a CPA network is most likely vast with expertise in nearly every vertical, but look for a network that matches your program with the most affiliate expertise in your specific vertical. Pro Tip:

One of the greatest benefits of CPA marketing for B2C marketers is that its based on the principle that marketers only pay for true results. Many traditional marketing methods utilize impressions or views as a measurement of success, but while indicators of effectiveness, these are measurements that cannot be directly tied to conversions or revenue. CPA performance marketing is rooted in strategic, commission-based partner-marketer relationships where payouts are placed solely on legitimate conversions as defined by the marketer.

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• There’s also a lowered budgetary risk, in that marketers are not locked into spending money on tactics that don’t perform. By only paying when a desired conversion occurs, marketers can avoid using ad dollars on placements with little to no proven value.

• Data transparency is especially important for optimizing lead generation campaigns, as there is no guarantee that a lead will result in a sale. CPA marketing provides marketers with data that allows them to hone in on the attributes of a more qualified lead, then adjust payouts appropriately. Read more about the benefits of data transparency in lead gen here.

Lowered Risk

Because payments are only made post-conversion, both network and affiliates can only succeed by driving non-fraudulent traffic. It is this heightened level of accountability in performance marketing that gives marketers greater protection than other forms of digital marketing.

Greater Data Transparency

• CPA marketing has the ability to provide B2C marketers with some of the most detailed consumer journey data in the digital marketing space. This is especially true when working with a reputable affiliate network or agency that has advanced platform technology, in addition to human optimizations and management. Being equipped with better data means marketers can not only continuously optimize their affiliate campaigns, but they can also apply learnings from this data to their other advertising efforts outside of affiliate marketing.

Pro Tip:

CPA marketing does not require a large investment of time or money, and a network with innovative technology and experienced account managers can do much of the work for you.

Ready for high-volume, costeffective, customer acquisition? Become a marketer with the #1

Network today. No matter how uncertain the landscape, the marketers’protectiveandtoprovideMarketingbasedperformance-natureofCPAwillalwaysareliablewayincreaseconversions,provideabarrierforbudgets.

High ROI CPA marketing’s ability to provide B2C marketers with a high ROI is thanks to a culmination of all its various benefits. Because you’re working on a model where you pay commissions for sales or other desired actions, rather than paying for traffic, you automatically set yourself up for a higher ROI than you’d have with impression-based marketing channels. CPA marketing also allows you to continuously optimize towards higher ROI, thanks to its sophisticated technology, greater affiliate transparency, and specific measurable results. CPA

• For marketers with mobile apps, providing links to your app in the app store(s) (Apple Appstore, Google Play, etc.) along with a landing page, if you have one, will help expedite the Network sign up process.

• To give a network a better sense of what they do, and don’t, need to cover in their discovery call with you, provide a list of your current media mix (where you’re currently running ads). For example, if you’re already running Google ads, Facebook ads, or even happen to belong to another affiliate network already, let the network you’re applying to know. Having this information up front will help guide your initial conversations with a network and in some cases, fast-track the approval process.

Applying to a CPA Affiliate Network

If you’ve decided its time to promote your product or service with CPA marketing, there are a few things you can do to speed up the process of joining an affiliate network or employing an affiliate agency. Check out these tips from our very own Perform[cb] team of marketer representatives on what to prepare before you apply to a network or agency.

Expert Tips To Get Started In CPA Marketing

Have your offer or app landing page links ready to share

The more optimized your offer landing page is for customer acquisition, the better especially for offers that will be promoted via desktop. What does that mean? A landing page that’s ready for CPA marketing should have a clear customer journey once a lead lands on the page. The call to action should be highlighted, and the action you would like that lead to take should be one that fits the CPA model. An example of what you want to try to avoid is using your homepage as your landing page. Oftentimes, home pages are designed to be informational, not with a clear customer conversion point in mind.

Provide a list of your current media mix

• For mobile app marketers, having an attribution platform in place before applying to a network is key. In fact, in order to do CPI or CPE marketing with most networks, an attribution platform is required.

•

Let the agency know if you’re new to CPA marketing, or if you already have an existing program

Mobile attribution is the process of attributing ad spend to user engagement or installs based on specific variables. These variables include things such as whether or not a user installs an app after seeing an ad and the actions a user takes after installing the app. An attribution platform tracks where your users are coming from and the conversion actions they’ve taken, then aggregates the information.

• An agency can help begin your affiliate marketing program, or take over an existing one from either your in-house team, or from another agency but knowing upfront will give the agency a clearer picture of the type of services you’ll require. If you have an existing program, have details ready on the current platform you’re tracking the affiliate program with.

• Establish the number of sales or amount of business your brand/service can reasonably handle before applying to an affiliate network. CPA marketing can be scaled quickly once momentum has begun, and the last thing you want is to not have the product or support to fulfill demand.

If you’ve tested paid placements in the past, provide those examples so the Agency can more quickly determine what was and wasn’t working for your brand Predetermine the budget you’re willing to dedicate to affiliate paid placements

Know what you’re willing to pay for quality traffic • Its important that you ensure you and the network you apply to can align on your budget.

Selecting an Affiliate Marketing Agency

Having a clear idea of what you’re willing to pay for high quality conversions allows the network to determine feasible affiliate commissions and the traffic volume your campaign would be capable of receiving.

• Having a budget in mind will help the agency determine which of their services will best fit your needs.

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Popular mobile attribution providers include AppsFlyer, Adjust, Kochava, Branch and Singular.

What is an attribution platform?

Pre-determine the volume you can handle at scale

When this app became a Perform[cb] client in 2016, they were looking to increase app installs on a CPI model. As the client’s goals shifted over time, Perform[cb] pivoted the campaign to a CPE model to align with the new goals. Since transitioning to the CPE model, the client was able to drive over 130,000 first-time in-app purchases, and has remained a marketer with Perform[cb] for continued campaign optimizations and management. Find the case study here.

21© 2020 Perform[cb] Predetermine your all-in CPA target or ROAS target for your performance marketing • With tracking costs and agency fees included, what is the end cost per acquisition or return on ad spend goal you’d like to achieve? Much like the tip above, knowing this up front will help the agency determine the best services for your needs, as well as expedite the initial discovery process. Share your current promotional strategy • What is your current marketing strategy? Do you offer promotions or discounts? Do you have seasonal changes for your product/service? Information like this will help the agency determine which affiliate partnerships will be most beneficial to your brand.

CPA Marketing Next Steps

While affiliate marketing may have had its roots in Nutra and Dating (and those continue to be strong even 25+ years later), Lifestyle, Entertainment and Financial brands have made performance marketing a cornerstone of their marketing plan after years of reaping the benefits of the channel.

A well-known photo printing app has found longterm success with the affiliate marketing channel thanks to its high level of transparency and continuous ability to optimize towards higher ROI.

CPA marketing provides all marketers with an equal opportunity to increase user acquisition, volume, and lifetime value. Because marketers are only paying for tangible, genuine results, CPA marketing inherently protects our clients’ ad spend. Working with a trusted Network or Agency partner supplies marketers with insights from years of industry experience, and equips them with the resources to hone in on the audience, pricing models, and KPIs that drive the most success for their business. Our marketers have achieved industry-leading results with their campaigns, while also experiencing the long-term benefits of the affiliate space such as greater transparency into the customer journey, value-aligned marketing spend, and decreased risk of fraud. The Perform[cb] team is here to help you streamline your marketing efforts and ultimately generate more revenue for your business.

Erin Cigich CEO, Perform[cb] Ready to go? Apply to be a Perform[cb] Marketer or Affiliate, or request an Agency audit of your program.

Ready to go? Contact our team of industry experts today, or apply to be a Perform[cb] Marketer.

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