CPA marketing and affiliate marketing are similar in that they reward affiliates for promoting a product/service. The divide is in their approach to compensation. The former rewards affiliates for specific actions performed, while the latter rewards affiliates for sales.
This article takes a deep dive beyond the primary differences to establish how each system works. This will help affiliates make informed decisions on which system suits their affiliate program marketing needs.
How Does CPA and Affiliate Marketing Work?
CPA is short for Cost-Per-Action Marketing. Affiliates get rewarded for specific actions performed by the traffic they generate. In other words, the traffic, reach, or impression isn’t the basis of reward. Specific actions must be performed by leads from the promotional activity for the affiliate to be rewarded.
CPA marketing requires effective tracking. Often, a CPA network serves as the middleman between advertisers (companies offering the program) and affiliates. These CPA networks provide a range of services, including tracking and attribution, payment management, compliance and fraud prevention, marketing and promotional tools, affiliate recruitment and vetting, offer aggregation and matching, as well as support and resources for both affiliates and advertisers.
Affiliate marketing rewards affiliates for generating traffic, increasing reach, driving impressions, or facilitating sales. The reward model is often based on commissions from closing sales. CPA marketing is a type of affiliate marketing that focuses on rewards for a predetermined action, which may or may not be sales-related.
For example,
- CPA marketing: Reward affiliates for every new YouTube subscriber.
- Affiliate Marketing: Reward the affiliates with a 10% commission for every item sold.
Differences between CPA Marketing and Affiliate Marketing
Aside from the primary difference in the reward model. There are other significant differences between CPA marketing and affiliate marketing. These differences can be the difference between a rewarding and non-fuelling affiliate career.
What are these differences?
Promotion requirements
The criteria for entering an affiliate marketing program are lower compared to CPA marketing. Given that CPA marketing rewards affiliates for performing specific actions, affiliates who choose this system are usually more skilled at digital marketing than the average affiliate.
This is because high precision and targeting are required to generate leads that are likely to perform the requisite actions. Similarly, CPA marketers need other technical skills to be successful. Skills like copywriting, paid adverts, designing creatives, etc.
On the other hand, an affiliate marketer doesn’t need to be very competent in the aforementioned skill sets to have a successful career. What is essential to an affiliate marketer is to sell a product or service, however they can.
Advertiser’s risk
In an affiliate marketing program, there are typically two or more parties involved. Sometimes three, but usually two. These parties include the affiliate, the advertiser (the company offering the affiliate program), and, in some cases, an affiliate network.
From their respective point of view, Advertisers who use CPA marketing find it low-risk because they only pay for specific actions that were performed. Affiliates find it high-risk because it requires a significant capital investment, such as setting up high-converting funnels to get leads to perform predetermined actions.
Advertisers and affiliates of affiliate marketing think differently about the risks. The risk is shared between advertisers and affiliates, so they are more at ease about the arrangement. When a sale is made, affiliates receive commissions, and advertisers are pleased with the sale. It’s a win-win for both parties.
Performance metrics
CPA marketers judge the performance of their campaign by comparing the number of actions, Cost per action, and their ROI. A successful campaign has an ROI that far exceeds the Cost per action. When the ROI is lower than the Cost per action, the campaign is considered a failure.
Affiliate marketers need not worry about any action. They focus on conversions only and are rewarded for the sales they drive. Other standard metrics they use include Cost per click, average order value, total sales, and conversion rate.
Target
CPA marketing is best deployed for advertisers who want specific actions taken through affiliate promotions. It is common to find these promotions in high-reward affiliate programs affiliated with the crypto and iGaming industries, where actions often take precedence – for example, OFFER.ONE is a CPA affiliate platform that is popular for its lucrative offerings and tools for affiliates seeking rewarding programs.
On the other hand, affiliate marketing has broad applications across all industries, except when a pay-per-action approach is employed. It is essential to note that CPA marketing is a type of affiliate marketing.
Targeting approach
The targeting approach in CPA marketing thrives on precision and accuracy. Most CPA marketing requires not only paid ads but mastery of targeting a predetermined audience using their demographic and psychographic information. The rationale is simple: you’re targeting those likely to take action.
On the other hand, affiliate marketers do not need to adopt paid or precise targeting. They are primarily out to generate leads that might go through multiple follow-ups to convert for sale, so the targeting approach doesn’t have to be as precise. Similarly, the copy for CPA marketers must be of the highest quality. Everything about CPA marketing screams precision, mastery, and accuracy. It is the only way to win big.
Promotional tools
Because CPA marketing requires high-precision targeting and investment in paid ads, affiliates can thrive without building an active social media following or a website. By creating a landing page by leveraging tools and tips for high-converting funnels, they can reach their target audience seamlessly.
Unfortunately, the same cannot be said of affiliate marketers, who often promote several different or related products. They will need social media pages, a YouTube channel, or a website to establish their authority and drive sales traffic. These tools are not a necessity for the CPA marketer.
Conclusion
Clearly, there is a difference in how CPA marketing and Affiliate marketing work. They have similarities in that CPA marketing is a type of marketing. Nevertheless, CPA marketing stands out by solving a unique market problem, helping advertisers save costs, and achieving results by rewarding specific actions vital to them.