A Simple Explanation about CPA and PPC

CPA vs PPC Simplified - Talking about online advertisement, we cannot avoid some technical terms like CPA, PPC, CPC, CPM, and so on. Either you are an advertiser, publisher, or viewer, you should understand the meaning that these terms stand for. Today, I am going to simplify the concept and practice behind CPA and PPC while the rests are left for next article.

Scenario for Advertiser

Assume that you use Google Ads to advertise or promote your product, you will need to pay (1) whenever your add is viewed for 1000 times (CPM), (2) whenever people click your add (CPC or PPC), and (3) whenever people follow your add and purchase your product (CPA).

Scenario for Publisher

Let’s say that you have a blog and you run an ad on it, you will be paid for (1) 1000 views reached by an ad (CPM), (2) every click that the viewers do on an ad (CPC or PPC), and (3) every purchase that your viewers do on the ad (CPA).

Scenario for Viewer

You often saw ads when you read articles on a blog, right? Sometimes, those ads were really annoying especially when a link you click didn’t bring you to the promised page but to ads. Well, that’s how most bloggers get their passive incomes. You don’t pay the bloggers but the advertisers via the advertisement networks like Google AdSense, MGID, or Adsterra. Whenever you see the ads, they are recorded and paid (CPM). If you click the ad, either because you are interested or just an accidental click, your click is recorded and paid (CPC or PPC). If you click an ad and purchase the product advertised, your purchase is recorded and paid. The blogger is paid by the advertiser.

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What's CPA and PPC?

The reason why advertisers pay for the advertisements is to make their products known and purchased; the second one is more important than the first. If they can choose, they will say that they only want to pay the CPA but the advertisement networks also count another thing, the ad space. Bloggers take advantages from this. By opening some spaces for ads on their blogs, they are paid, although they do nothing more. Imagine when internet was not this good, you must pay people for distributing your brochures although none buy your product, that’s CPM.

PPC stands for Pay per Click which is synonymous to CPC and CPA stands for Pay per Action or Pay per Acquisition. How they are calculated is quite unimportant for bloggers because all the bloggers want is to be paid while sleeping; they may be interested to the ads that pay them in the highest price and block the ones pay less. Meanwhile, viewers are busy to install ads blocker plugins on their browsers. However, this is important for the advertisers to know because they are the ones who pay for it.

The CPA formula, I quote from Creatopy, is:

CPA = Cost per Clicks * Clicks / Actual leads

Or

CPA = Cost per Mile / Actual leads

Some advertisers decided to pay only CPC/PPC and some others decided to pay CPM/PPV. Richer advertisers perhaps paid for both. If they decided to pay only the CPC/PPC, they pay only the clicks gotten by their ads. So, they don’t pay for ads views. However, how long should they wait for their products to get purchased? Moreover, clicks do not always mean purchase. People may click their ads but they do not necessarily purchase the product. If they decide to pay only for CPM, they may pay less and it is valued at 1000 impressions.

Bloggers or publishers can go well with CPA or PPC ads. In fact, most of them don’t really care about it. Once their blogs are approved by Google AdSense, what they do usually is just getting the ad codes and put them on their blogs. The most important thing for bloggers to know is to avoid cheating with the ads if they want to get paid, not banned.

That’s all about CPA and PPC. I do believe that my explanation is simple so that easy to understand. In case you didn’t catch the terms, CPA stands for Cost per Action (or acquisition), CPC or PPC stands for Cost per Click or Pay per Click, and CPM stands for Cost per Mile. See you again.