RE: Cost-Per-Action Advertising
MICHAEL EHLENBERGER <michael_at_premiumnetwork.com> WROTE:
>I'd like to hear from a broad group of people on this
>list as to what their experience has been with CPA
>deals, and what they have done to make the process
>manageable and profitable!
Our experience with CPA advertising has varied, but
this is usually a losing proposition for an agency.
Realize that a CPM pricing model is most beneficial to
the Publisher, CPC to the Agency, and CPA to the
Advertiser, based on risk. We've gotten burned doing
CPA deals with poor response. We've done some good
deals too, and the difference is careful testing and
realizing that your response rates are going to drop
quickly over time.
If you do a 6-month buy based on a certain response
rate as the baseline for the payout on the CPA deal
and don't account for an incremental drop in response
to the offer over time, then you will likely get burned
as a publisher because the quantity of sales will come in
far below what as anticipated for a decent return. The
advertiser also then will not have achieved their
expected return either leaving both partners upset.
So its best to do a sizable test at a CPM or CPC rate
to begin, then once the performance metrics have been
determined (and can be shared) move forward with a CPA
negotiation based on anticipated diminishing returns in
terms of response. CPA deals tend to do better on sites
with a strong number of unique visitors utilizing a
permanent placement with a strong offer and
call-to-action in the creative. Good contracts
outlining sales reporting and make-good policies are
also key. Paying for a percentage of transactions
up-front will also aid in negotiating rates.
Time-sensitive offers should not be used with CPA
pricing models as its likely that you will have to be
flexible in extending your flight.
Adrian Funnell| Account Planner
beyond interactive | digital advertising and
media specialists
71 Stevenson, Suite 1125 | San Francisco | CA 94105 | USA
p415.343.5342| f 415.343.5301
afunnell@gobeyond.com | http://www.gobeyond.com/
Received on Mon Apr 30 2001 - 02:48:44 CDT
