Lead Gen Business Model Explained

CPA (Cost per Action) marketing is an online business model where you get paid for getting website visitors to take a specific action as part of the online offer you’re currently promoting.

Unlike affiliate marketing where you’re only paid commission if you make a sale, CPA marketing allows you to get paid by getting people to submit an application, download an app, or even just create an online account for a particular service.

In effect you’re running a lead generation business that provides online businesses with new potential customers, and you’re paid very well to do that.

One of the most attractive aspects of CPA marketing is the amount paid for each lead. It can vary from $1 – $2 for an email address, to US$200 for a loan application. There’s also no limit to the amount of money you can make once you’ve found a profitable offer to promote.

A CPA marketing business can be operated using either paid or organic search traffic, and is an ideal business for a person with high energy levels who can adapt to changing markets and promotions.

How Business CPA Marketing Works

CPA marketing is very similar to affiliate marketing in that you promote a specific type of product or service, and if you’re successful you are then paid a commission. Where this type of business model differs to affiliate marketing is that you’re not required to make a sale to earn a commission.

Instead, you earn a commission when your visitors complete an action, such as entering their email address, submitting an order for a free trial of a product, or just downloading an app. This process is also known as lead generation, which is a fancy way of saying that you help create new customers for an online merchant.

You can sign up with CPA networks to promote a range of products in the same way you can sign up with standard affiliate networks. There is, however, one small difference – you have to be approved before you can promote a CPA offer.

With affiliate merchants it’s usually a case of being automatically approved (with some rare exceptions), and then placing merchant links on your site. When promoting CPA offers you will be vetted by their affiliate manager to ensure that you’re not trying anything shady when promoting their product or service.

Once you’ve been approved you can then promote the offer either via the organic search engine traffic coming to your website, or by using paid traffic in the form of PPC (Pay per Click), PPV (Pay per View) or through Media buys (banner advertising). Regardless of how you generate traffic the result is the same: You promote an offer. An interested person clicks on the offer, and if they take the required action you are then paid your commission.

The really successful CPA affiliates – the ones who are earning $5k to $10k per day – rely exclusively on paid traffic. Using this type of traffic can provide you with almost instant revenue, but you obviously have to pay for the traffic first.

This means you need to carefully monitor how much you’re generating in profit versus how much you’re spending on advertising if you want to avoid making a loss. Many CPA marketers lose money learning the ropes when they first start out.

One of the keys to becoming a successful CPA marketer is choosing a market and sticking with it until you find an offer you generate profit from.

How to Make Money from CPA Marketing

If you ask anyone making a full-time income from this type of online business for the best advice they can give you we know they’ll all have the same answer – test and track.

Testing in this context means that if you drive visitors to a CPA offer and it doesn’t convert into revenue, then drop it and test another offer, and another, and another until you find one that gives you a positive ROI (return on investment).

Once you’ve found a profitable CPA offer you then need to track your exact advertising spend on it versus how much you’re earning from it, as well as testing different types of paid traffic to it.

For example, how well does the offer convert with PPC vs. PPV vs. banner advertising? The next step you then take is to scale up your advertising campaign to generate even more money from that same CPA offer.

There are plenty of CPA affiliates who rely on non-paid traffic from the search engines, but they’re always limited in how much money they can make from this type of marketing because they can’t increase the number of visitors they get at the flick of a switch.

The really clever CPA marketers will generate their own leads as part of their advertising campaign, capturing email addresses they can market to later on with a whole new range of CPA offers.

How Much Can I Make from CPA Marketing?

This will depend on you finding an offer related to your current audience or market, so your audience is pre-sold on products of this type e.g. don’t try promoting a dating site to a group of emergency preppers.

The offer also needs to be worth promoting in terms of how much commission it pays, although the higher the commission the more competitive a given market is.

For example, if you’re promoting an online dating site you might earn $10 for each new lead you generate, whereas you could easily earn $100 per lead for a credit card offer.

It’s no secret that there are plenty of CPA affiliates making several million dollars per year, with thousands of others earning anywhere from $100 to $1,000 per day in a business that they run on their own.

So, in terms of how much money you can make from CPA marketing it all comes down to finding a great offer that people will want, one that pays a healthy commission, and then how big your advertising budget is.

With CPA marketing you will need an advertising budget to get started, unlike regular affiliate marketing which can be started with little or no cash.

Examples of CPA Marketing in Action

CompareCards.com

The first thing you’ll notice about this site is that it doesn’t look like your average affiliate or CPA website, and that’s because it’s not. On face value it looks like a very professional site, helping you choose the best credit card for you.

But when you look under the hood you’ll see the site uses blog posts to recommend a number of different credit card offers. How much is this site making? At a guess it’s pulling in at least US$100,000 per month, but probably twice that.

ToptenReviews.com

If you’ve ever looked for a review for anti-virus software, or almost any other software you can think of, then you’ll have come across Top Ten Reviews. These guys have been around forever and focus heavily on CPA offers relevant to their audience i.e. software products. McAfee pays $25 for each lead you generate for them, and that’s just one of thousands of products listed on Top Ten Reviews.

SupplementPolice.com

Finally we have a fairly typical example of what most people expect a CPA affiliate website to look like and it’s promoting health offers, which are some of the most profitable in the CPA industry. We can’t estimate how much revenue this site is generating per month, but they are ranking on the first page of Google for a number of profitable CPA offers.

Pros/Cons of CPA Marketing

Pros of CPA Marketing

  • You can start earning commission almost instantly when you use paid traffic
  • The amount of commission paid is far higher than most normal affiliate programs
  • A CPA marketing business can be run by one person with a laptop
  • Your CPA network will assign a dedicated affiliate manager to help you generate as much profit as possible
  • Top-performing CPA affiliates are often rewarded with expensive prizes
  • You can scale from earning nothing to several thousand dollars per day in weeks

Cons of CPA Marketing

  • As soon as you stop promoting an offer your income dries up – there are no residuals
  • CPA offers can go offline with no warning, leaving you with no income and paid advertising expenses
  • CPA marketing can attract vendors selling barely-legal offers – especially those with recurring billing or what they refer to as “forced continuity”
  • It is as easy to lose money as it is to make money with this business model
  • As soon as your campaign becomes successful it will most likely be ripped off by other affiliates and sometimes even by the ad networks themselves

Getting Started With CPA Marketing

Your first task is to sign up to several CPA affiliate networks, such as MaxBounty and PeerFly. Once your account has been approved it’s time to get into research mode and find an offer which either suits your current online audience, or one that you want to build an online presence for.

When you start off try to find a really niche offer that generates profit but doesn’t exist in a saturated or competitive market e.g. health, dating, gambling, etc. Also avoid any CPA offers that seem shady – you can tarnish your online reputation overnight by promoting the wrong type of offer.

Costs Associated

If, like most CPA marketers, you plan on using paid traffic to promote a range of offers, this will be your primary cost. How much can you expect to spend? The sky truly is the limit here, so you need to be honest with yourself about how much you can afford.

Some paid advertising networks have a minimum daily spend of $5, so you’ll need at least $150 to get started. If you plan on doing media buys then your budget for promoting offers will need to be several hundred dollars per month.

Just remember that testing and tracking offers is the best way to avoid blowing your advertising budget in a matter of days instead of weeks.

What You Need

Joining a CPA network won’t cost you anything, so besides the cost of a domain name and some web hosting there’s very little in the way of startup costs to get up and running.

A domain name will set you back around $10 per year, and you can get excellent web hosting for under $10 per month, or even less if you pay for a year’s hosting in advance.

If you don’t already have a website then you’ll need to add another $300 – $500 to your start up costs to have a professional website designed.

How Long Will it Take to Make Money with CPA Marketing

The beauty of this online business model is you can start generating income almost overnight when using paid traffic. If you choose to use organic search engine traffic you can still generate an income very quickly from CPA offers, but you’ll find it difficult to scale your business without spending money to cater for any successful offers you do find.

In theory you could start a CPA marketing business tomorrow, be generating income within 72 hours, and receive your first payment from a CPA merchant within 30 days.

Best CPA Training Courses

Coming Soon

Scroll to Top

Which Online Business Model is Right For You?

Take The Quiz

8 Questions -100% Free - 2 Minutes