Defining CPA

From: Josh Dahmes <jdahmes_at_markneting.com>
Date: Wed 28 Nov 2001 10:33:34 -0500

Hello all,

This message is mainly directed to Andy and Rob but would
love input from the rest as well.

Andy, you defined CPA as Cost Per Acquisition, a common
definition I agree. But another definition, which I
believe Rob subscribes too, is Cost Per Action. Cost
Per Action is a much more encompassing term which
includes Cost Per Click (CPC), Cost Per Lead (CPL) and
Cost Per Sale (CPS). We have lots of CPx's here... Is
there an industry standard?

As a background, I work for a company on behalf of many
different clients who operate in the Internet realm so I
am looking at this from an agency point of view, though
I don't think that matters much in this case. But
when I am talking to clients and I refer to CPA I am
talking about Cost Per Action, so to me the two types are
CPM (Cost Per Thousand Impressions) and CPA. Of course
there is still the time oriented sponsorships as well.

As an aside, on the CPM vs CPC debate, I believe there is
room in the world for both. Obviously many clients love
to advertise using performance based methods because it
is easier to calculate margins and commissions etc. And
it should be equally obvious that any publisher should
want CPM because I agree with the sentiment that is the
publisher who provides the audience and should not be
responsible for the purchase.

But not all clients even want an action to result directly.
Take a power brand like Coca-Cola, they are looking for
top of mind placement and long-term effects from their
messages, not a quick sell. Of course they also have
their impulse point-of-purchase displays (more closely
aligned with CPA) but the majority of their advertising
is much more long-term. I believe it will eventually
become the same (if it isn't already) with their online
efforts.

A large client with a big name and a power brand may have
the power to sway publishers into using CPA (or CPC see
above) deals because of the brand/product recognition.
A large publisher may also have the power to sway
advertisers into using CPM deals because of the same. I
don't think either is without merits, I believe it is up
to the advertiser/publisher relationship to determine what
is a win-win for the both of them. Maybe that is some
form of hybrid between the two. The great thing about the
Internet is that it allows us to test these things quickly,
make changes immediately and retest. This can be done in
days not weeks or months like in the offline world.

We are in the early stages of the shakeout of what works and
what doesn't work, which sites will stay and which will fall.
Who knows what will come next, but all industries eventually
find their equilibrium... I just hope we are all still around
when this one does.

Josh Dahmes
Project Manager Internet Marketing
MARKnETING
Weaving the Web into Marketing Results






Received on Wed Nov 28 2001 - 09:33:34 CST