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What is CPL / CPA / CPS?

Cost Per Lead / Cost Per Acquisition / Cost Per Sale. In this model the advertiser pays explicitly per transaction type made by the buyer that resulted from a click on a banner impression.  Payment depends either on the cost of lead, cost of sale or a percentage of the sale’s revenue.  For example, a banner is being shown 200,000 times, and being clicked 1000 times. 10 clicks converted to a lead where the advertiser pays 5$ per lead. The total advertising cost would be 10*5 = 50$.

Advantages

  • The advertiser pays according to results only.
  • The banner will be shown for unlimited period of time.
  • Preferred model for the advertiser. Zero risk on his side.
  • Low vulnerability to frauds.
  • High correlation between sales and campaign and banner quality.

Disadvantages

  • Publisher will not allocate premium media for questionable profit
  • Publisher will refuse to work in this model when cpm / cpc models can fill his inventory
  • Dependable on conversion tracking technology and measurement.
  • Hard for the publisher to estimate when to stop a campaign
Day 1 Day 2 Day 3
Impressions 200,000 150,000 200,000
CPL [fixed rate] $5 $5 $5
Leads 10 15 12
Cost $50 $75 $60

Note: There are many other Cost Per Action models, like Cost per Call (for cellular advertising), Cost per Download (for downloadable products), Cost per View (a common term for video based advertising).  Advertisers who claim to support all available model sometimes use the term CPE – cost per everything.