The calculation formula is:? CPA= total cost/number of conversions. For example, in a certain period of time, the cost for an advertiser to advertise a product online is $6,000. This online advertisement has 600,000 exposures, 60,000 clicks and 1200 conversions. Then the impression cost of this online advertisement is: CPM = 6000/600000 *1000 =10 USD.
What is the cost per click of this online advertisement? CPC=6000/60000=0. 1 USD. The cost per action of this online advertisement is: CPA=6000/ 1200=5 USD.
CPM is the most widely used and simplest indicator. The online advertising cost of advertisers is a certain number, and the number of advertising exposures is directly provided by ISP or ICP, so CPM is easy to calculate.
Advantages and disadvantages:
The pricing method of CPA has certain risks for the website, but if the advertisement is successful, its income is far greater than CPM advertisement. In order to avoid the risk of advertising costs, advertisers only pay the advertising site fees according to the clicks after the network users click on the banner advertisements and link to the advertisers' web pages.
More and more website media reject CPA mode after practice, so it is difficult to find suitable media for CPA paid advertisements. Therefore, CPA advertising model is risk-free for advertisers, but it is not very popular for website owners.