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  1. #1
    SitePoint Member
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    Shedding Some Light on CPA

    Everyone recognizes that CPA is becoming “the holy grail” (according to industry experts) of online marketing, but few people seem to understand why. Read below to shed some light on the subject.

    As the online marketing industry evolves, CPA (Cost per Acquisition) has become the only logical mechanism in this pursuit. CPA brings forth a new form of technology with the ability to control and minimize risk, capturing an advantage previous marketing methods could not. Being based upon the understanding and tracking of the true consumer value, CPA has naturally surpassed previous marketing methods that essentially “pay for eyeballs,” such as CPC (Cost per Click) and CPM (Cost per Impression). Incorporating CPA into marketing strategy benefits not only advertisers by minimizing risk but also publishers by maximizing returns. It also allows for better targeting and optimization as opposed to impression-based campaigns as seen before. While industry professionals finally begin turning heads toward CPA’s new strategies and what it has to offer, a small number of online marketing agencies have been providing its technology for years.

    Advertisers and CPA
    An advertiser in today’s marketplace purchasing Internet advertising entirely on a branded or CPM-based model would be like one of the original television advertisers scrolling newspaper text across the screens. Meaning, it simply does not take advantage of the technology. CPA is the most logical choice based on its minimal risk proposition – with an advertiser not paying for any marketing unless an acquisition is received.

    While previous marketing methods provide advertisers with detailed information regarding demographics, psychographics, etc., they each make arcane assumptions in the end leading to flimsy assumptions of what consumers actually want to see and completely fall short of defining what a consumer actually wants. Prior to CPA, campaign views and impressions were essentially wasted, as the campaign’s performance was purely measured by little to no concrete measure of accountability on the results.

    CPA provides an outlet which eliminates any guesswork. Incentive, random and fraudulent clicks are no longer cause for unnecessary fees. Advertisers can learn exactly what each consumer wants and maximize the revenue based on that information. Advertisements are no longer hit or miss. With the proper CPA metrics provided, the effectiveness of each branding stage can be measured and optimized. CPA allows advertisers to work in a basically no-risk environment. They know exactly what they are paying for because they are only paying when the set objective is met.

    Publishers and CPA
    Previously in the industry, publishers determined what his or her users were interested in through trial and error. Risks were taken with each campaign ran until one provided higher CPMs. These campaigns, however, were inefficient. Publishers experiencing higher ratios of failures vs. successes tend to force advertisers to eliminate or lessen marketing expenditures. Or, on the other hand, such advertisers may increase ROIs due to the risk factor associated with campaign failures – resulting in lower CPM rates or ECPM rates on CPC marketing. Just as CPA strategies eliminate the guesswork for advertisers it does for publishers as well. Because advertisers are only paying when objectives are met and by only working with the best advertiser campaigns, they are willing to provide publishers with higher payouts for these campaigns. This combined with the comparison and maximization (through optimization) of CPA allows for a much higher return on a per user basis.

    Performance-based networking applies advanced CPA strategies to provide advertisers and publishers with minimized risk and maximized returns. Quality leads and conversions provide insight on the true consumer value where previous industry methods fell short. Allowing for better targeting and optimization, CPA leads the online marketing industry’s most recent phase shift of media buying.

  2. #2
    SitePoint Enthusiast
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    I use CPA offers as a "Step Up" from AdSense and just before testing direct sales offers.

    Nice write-up.

    Michael
    ~...............~
    $100 a Day
    ~...............~

  3. #3
    SitePoint Enthusiast Stephens's Avatar
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    I prefer CPA

  4. #4
    SitePoint Enthusiast
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    The CPA deal was once vilified..in fact affiliate programs 6 or 7 years ago were shunned in favor of CPM campaigns. However, times have definitely changed and affiliate programs are totally in vogue and gaining popularity all the time as more savvy webmasters and part-timers get into the mix.
    Evan, CEO
    Experience Advertising, Inc. Affiliate Program Management

  5. #5
    SitePoint Member
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    Thanks for the comments everyone! I really enjoy hearing your thoughts!

  6. #6
    SitePoint Wizard
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    I use both Cap and affiliate programs. I use adsense on very few sites just to earn some extra money on them. I do well with some Cpa programs and others not so good. Affiliate programs are the same way you have to find a few good ones to make money.

  7. #7
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    Yup... nothings better then cpa...
    Charles Gavet, Affiliate Manger, CPALead.com
    HIGHEST PAYOUTS | ROCK SOLID PAYMENTS | REAL 24/7 SUPPORT
    BEST PERFORMING OFFERS | TOOLS YOU HAVE NEVER SEEN BEFORE
    60+ INCENTIVE OFFERS

  8. #8
    SitePoint Guru RevenuePilot's Avatar
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    The fact remains that no decent brand name publisher will ever agree to cpa. Try having marketwatch, espn or any other site take cpa offer, they will just laugh at you. I have friends in the industry who work for site rep companies and i been told number of times that cpa companies are calling like crazy trying to get distribution for their offers but nobody wants to take them. I mean if cpa would be easy to distribute people wouldnt pay up to $50 per click on Google. Yes you can optimize your cpm or cpc media based on cpa goals but its really hard to buy any quality inventory on good site if your model is cpa. At the end of the day good publishers have no problems generating decent cpm rates, so they have no reason at all to sell their space on cpa model.

  9. #9
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    substitue

    hey,

    I also use cpa as a substitute for adsense, do a test and Ill bet you come out smiling.

    thanks andy

  10. #10
    SitePoint Wizard OnlineGuide's Avatar
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    Are you guys smoking crack or something? CPA will never replace CPM or CPC advertisements. Sites which use DoubleClick and Accipiter have to pay a CPM fee for each impression. CPA puts way to much risk on the publisher. I would like to see CNet or WSJ take a CPA ad. Maybe when ad serving becomes free CPA would become more attractive. That should be the same time you'll see buffalos fly around the sky (I changed it from pigs to buffalos because of the flying Capital One pig promotion - http://biz.yahoo.com/prnews/071113/netu092.html?.v=28).

    Very interesting thread though, even though the poster is a bit bias.
    The Online Guide

  11. #11
    SitePoint Member
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    I appreciate all the feedback everyone! It is great to hear different views, even if they are different than mine.

    Ohh, and buffalos with wings...nice touch. I like that! Jessica Simpson would appreciate it as well I think!

    Anyway...please keep up the thought-provoking replies!

    Best,

    Clickbooth B
    Last edited by ClickboothB; Nov 29, 2007 at 14:35. Reason: spelling
    Clickbooth
    The Exclusive CPA Network
    http://www.clickbooth.com

  12. #12
    SitePoint Member
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    CPM, CPC, and CPA are a pretty straight forward risk continuum. The big sites are important enough that they don't have to shoulder any of the risk and they sell CPM and premium CPC. The small sites have no reputation and market power so they take on the risk and sell discount CPC and CPA. The trick is figuring out where you are on the continuum and maximizing return.

    Happy Holidays

  13. #13
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    I'd like to chime in here too. The thing to be aware of is that CPA is the future of the industry. Think about it from an advertiser's perspective (since they're the ones shelling out the dough).

    Would you rather pay for people to see your ad, or would you rather pay for results - customers, sales, leads, etc? From an advertiser's standpoint you'd rather pay for results. Thats what has made online advertising a great tool in the media mix - you can track everything.

    Now back to the publishers - except for companies like Coke, who are living off of branding, nearly all internet advertising backs out to a CPA. Advertisers want to see results.

    Even if you or some of the sites mentioned in this thread are still being paid on a CPM the people paying you are likely backing it out to a CPA and getting a bigger chunk of $$$.

    Think about it - do you have (or see) advertisers that rebook the same offers over and over? Then these offers are converting for them. They've hit their metrics and are making a cut on CPA and paying you on a CPM.

    Cut out the middle man

    Its the future of online advertising and where its all headed
    ErinClickbooth
    Director of Strategic Partnerships
    http://www.clickbooth.com

  14. #14
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    Hi Everyone,

    Does anyone think cpa will replace cpm and cpc advertisements ? or does everyone think there will always be a market for cpc, cpm and cpa ?

    Thanks

  15. #15
    SitePoint Wizard OnlineGuide's Avatar
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    Not likely. There will always be a place for all 3. CPA is just the "it" thing this week. http://www.adotas.com/2007/12/the-ch...retrospective/
    The Online Guide

  16. #16
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    Hi,

    Thanks for the reply. I agree with you. When text based ads first came out everyone was saying that cpm will "go by the waste side" but the direct opposite happened. CPM got bigger and better. I think the same will be with cpc advertising. Why would any of the search engines want to get ride of cpc advertising in the far future ? They can't because they have made billions and people all over the world have gotten use to cpc advertising, its affective, profitable and one can track it. In the future I see a market for cpm, cpc, cpa, video based ads, voip ads etc....

    Does anyone agree with me ? Disagree ? any thoughts welcome.

    I would also like to add that the more products search engines/advertising firms offer the more customers they will garner.

    Thanks

  17. #17
    SitePoint Wizard OnlineGuide's Avatar
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    Very true. Google made around 2.5 billion or so this year. I am sure they will get rid of it for CPA possibilities.
    The Online Guide

  18. #18
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    Very useful discussion. I use mainly CPC / adsense and somewhat CPA...

    Thanks!

  19. #19
    Team SitePoint
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    Quote Originally Posted by ErinClickbooth View Post

    Its the future of online advertising and where its all headed
    That's rubbish, though I can see why you might be a bit biased

    CPA has been around for ages, and will continue to be popular in future. CPC, CPM, and CPA all have their place in online advertising.

    Quote Originally Posted by zcoelius View Post
    CPM, CPC, and CPA are a pretty straight forward risk continuum. The big sites are important enough that they don't have to shoulder any of the risk and they sell CPM and premium CPC. The small sites have no reputation and market power so they take on the risk and sell discount CPC and CPA. The trick is figuring out where you are on the continuum and maximizing return.

    Happy Holidays
    Well put
    Simon Mackie


  20. #20
    SitePoint Zealot
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    I wonder is there a market for a mixed bag?

    What if you were payed on a cpm/cpc basis with a cpa kicker?

    Like how a salesperson receives renumeration a salary plus a commission based on the sales they achieve or a movie star is payed a certain amount to be in the film but gets himself a cut of the gross.

    Why cant you run ads on your site they will pay you just for been there... plus give you a bit of the action if they convert? It would certainly encourage webmasters to not only run the ads, but make sure they were in prime positions to give a return to the advertisers and therefore add to their own bottom line.

    I'm guessing this is already done with some sites?

  21. #21
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    Typical of a ClickBooth employee....

    Affiliate offers can be great if you work with the right merchants DIRECTLY and get higher payouts from them

  22. #22
    SitePoint Evangelist asprookie's Avatar
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    Affiliates I've chosen offer products in-line with what my niche is about, those are CPAs and what those DIRECT affiliates have in common? More than 100 000 (some in multiple millions) products/items to choose from, can`t get better than that. Other than them, it`s CPM or Pay-per-click. I am in no way interested in going CPA with brokers, it doesn`t pay. So CPA for affiliates only and others have no choice but to pay if they need any form of exposure on my website. My visitors are precious and I will not overwelm them with tons of useless ads. To conclude, as far as niche websites goes, web real estate has a price and CPA for me is a big NO.

    Would you expect ads in print to function as CPAs? are you kidding? Exposure has a price, period.

  23. #23
    SitePoint Evangelist asprookie's Avatar
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    What if you were payed on a cpm/cpc basis with a cpa kicker?
    Agree with XCel, won`t run ads for free, rent ain`t free. Nope, CPA is not the way of the future.

    On a side note, I like widgets, don`t mind displaying branded widgets, they are fun, useful and visually apealing.

  24. #24
    SitePoint Guru marcel's Avatar
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    This thread started out very well, but it's sad to see the CPA supporters with so few posts. Sitepointers arn't so easily swayed folks .

    @EricClickbooth
    Cut out the middle man
    But you are the middle man!
    I'd like to chime in here too. The thing to be aware of is that CPA is the future of the industry. Think about it from an advertiser's perspective (since they're the ones shelling out the dough).
    As a publisher, I would rather see it from a publisher's perspective. I'll think of it from an advertisers perspective when we are at the negotiating table.

    Smart publishers that know the industry sell their own homegrown products - like Sitepoint.
    Smart publisher don't give away free publicity to advertisers who only pay when a product is sold. CPA gives away free advertising to nonpreforming advertisers.

    Its the future of online advertising and where its all headed
    No way. CPA is more work/risk for publishers and less work/risk for advertising networks and advertisers.

    @ClickboothB
    Incorporating CPA into marketing strategy benefits not only advertisers by >minimizing risk but also publishers by maximizing returns.
    Translation. "Advertisers risk little to nothing , and get free publicity from a multitude of publishers. Publishers spend time and ad inventory testing one CPA product at a time. "

    There is a time and place for everything and I am sure there are areas where CPA works well. Thankfully we do have balanced alternatives.

  25. #25
    HAHA!
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    Alright here's the perspective of a CPA sitepointer. I think all the different ad methods have their place but have to agree with Simon that CPA is unlikely to take over or grow exponentially. It will remain a viable tool for targeted sites to generate CPMs that will be up to a hundred fold of what normal CPM publishers could achieve. On the other hand they usually have a 100 times less traffic as well so it's all a numbers game at the end of the day.

    What I also like a lot are programs that offer a recurring cut of customer's revenue like in poker and some other industries for instance.
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