What is CPA marketing and Why do you need it?

So you own a consumer packaged goods (CPG) brand and are curious to learn how affiliate marketing can help you grow even quicker?

You’ve heard something about affiliate marketing. But in most cases, all you’ve heard about was shady people and shady companies making millions by selling shady products. Am I right?

This is not the case.

In this short article, I will be explaining how direct-to-consumer (DTC) brand owners can speed up their growth by using CPA marketing as an additional sales channel…. and…

you will not believe this one...

... it will all happen in a legitimate way!

What is CPA marketing?

Cost-per-action marketing (CPA)—actually, I prefer the term **performance marketing—**is a type of affiliate marketing that offers commission to the publisher (someone who promotes your product) when a specific action is completed – for example, by making a purchase or filling out a form.

In reality, it looks like this. A DTC brand owner is building a unique offer and has dedicated a sales funnel for this offer. Once a publisher receives his link with his affiliate ID, he can start bringing traffic to this funnel.

Advertisers (brand owners) are paying fixed commission for every completed action. It’s as simple as that.

What are the advantages of CPA marketing?

For brand owners, there are plenty of advantages. Here are just a few of them—

Pay for the customer. There is a fixed price for every customer. So you remove the volatility factor out of your customer acquisition cost.

Low risk. There is no need for any upfront investment for CPA marketing.

Expand your reach and scale faster. CPA marketing gives you scale. Your brand will reach wider audiences in a shorter period of time.

Increase ROI. Increase your ROI with a successful CPA marketing campaign.

Venture capitalists love it. Just imagine the reaction of VCs when we tell them that we can grow their portfolio companies at no extra cost.

Is your brand ready for CPA marketing?

Your brand and your business need to be prepared for this. There are many factors that have to be considered before launching a CPA marketing offer. Here are just a few of them.

Validated customer acquisition strategy. Before thinking about building a CPA offer, you need to have all the numbers in place. What’s the lifetime value of your customers (LTV)? I hope it’s at least 3–5 times bigger than your average order value (AOV). If not, you might have a problem. Your brand’s customer acquisition strategy should focus on the LTV – not the upfront customer acquisition cost.

Manufacturing issues solved. If your CPA offer is successful, then during a very short period of time you will see a dramatic increase of sales. When that surge happens, you need to be prepared to deliver. Do you have enough stock in the warehouse? Is your manufacturing partner capable of satisfying the increased demand for your product? For affiliates It can be very disappointing to pause an offer just because the brand owner doesn’t have enough stock.

Customer support. Obviously, your customer support will see a huge increase of tickets. Are they well trained to cope with the increased flow of customers and the problems to be solved?

Order delivery. This is super important. You have to have a proper system in place that avoids long delivery times. Consumers love receiving products on time. On the other hand, late shipments decrease the customer feedback score on Facebook which increases CPMs. In this case, campaign profitability will decrease.

CPA marketing is not your Golden Goose

Ok, yeah, yeah… I know. It sounds amazing, super effective and easy to do.

However, I have to disappoint you. CPA marketing (performance marketing) is not your golden goose or your key to becoming filthy rich.

It’s only an additional sales channel that enables you to reach wider audiences in a shorter period of time. Simple as that.

If done right, it can be a major source of revenue for your business.

Interested in exploring the capabilities of launching a CPA offer for your direct-to-consumer brand? Contact me directly on LinkedIn or drop me an email at adomas@lastclick.media