NONE: Re: ONLINE-ADS>> Industry duck and cover?
Re: ONLINE-ADS>> Industry duck and cover?
e/y/e/s/c/r/e/a/m/ - Adam Boettiger (ab_at_eyescream.com)
Thu, 24 Sep 1998 14:55:14 -0500 (CDT)
Brad Byrd wrote:
> Wow! I'm really surprised at this list. Last week I
> submitted a post entitled "Cost-Per-Action Price
> Convergence", where I asked for feedback from members about
> this model and how it might be priced...
>
> I got ONE. One reply.
Brad, that honestly doesn't surprise me one bit. I experience the
same thing at times on my discussion list (a lack response) to
certain topics. In this specific instance in my opinion it can be
attributed to one of two factors:
Few online ad agencies feel comfortable sharing information on
their buying techniques, either because they don't use or understand
how to apply this particular CPA model to interactive advertising
and they don't want people to find out that they are just learning
about it, or because they do know about it but don't want to give
any knowledge or experience to their competitors who may also
be on this list.
Agency folk are mostly lurkers, and some agencies also have
gag-order policies in-house that prevent them from participating
in discussion lists such as this one. Sad, because they can
get a ton of new business just by participating and helping
others, but true nonetheless. On my list I have subscribers
from all of the major traditional agencies as well as most of
the interactive ones, and it is very rare to have them contribute.
Not saying that when they do it isn't valuable, but that they
rarely do.
> The question: how much are you willing to pay, per action
> (clickthrough), f or this delivered traffic? Basically, I
> guess, its similar to the GoTo.com model. The CPA model
> could cost you much more than a CPM model... but, of course,
> the message delivery is much more qualitative too, and you'd
> probably be willing to pay for that...
>
> So, what do you expect the price convergence to be? I've
> seen articles in DM discussions where the CPA is between
> $1-3, but that seems high -- I'm sure that's based on an
> order conversion model and not a branding model.
CPA is a broad term. Here's what it can be broken down into:
CPC - Cost Per Click or "Clickthrough Pricing" ranges
anywhere from 20 cents to $1.20 per click, depending on
how affluent the site is and how targeted. Occasionally it is
possible to get a lower buy than 20 cents per click, but
that is just nameless, faceless bodies (untargeted), and
more often than not CPC inventory is in high demand and
that is driving industry rates up. CPC inventory is selling out,
which is driving rates up, while CPM inventory remains in
excess which is driving rates down.
Pay Per Lead runs between $1 and $15 per lead, depending
on the product value, of course. Sometimes more.
Pay Per Sale typically runs between 5% and 30% of the
product's purchase price.
All of the above models are considered CPA or Cost Per
Action.
Obviously the response heard most often when asking, "How much
are you willing to pay per action?" is invariably "We want to pay
as little as possible", which is understandable. But it is fairly
easy for a business to calculate the maximum amount they can
afford to pay for each visitor and for each action, taking into account
profit margin and visitor to action conversion. We do it quite often
for our clients and base most campaigns on this type of
"Cost Per Objective" line of thinking - at least on Direct Response
online campaigns.
Hope this helps,
AB
List Moderator, The Internet Advertising Discussion List
http://www.internetadvertising.org/
----------e/y/e/s/c/r/e/a/m interactive, inc.----------
adam boettiger - e: mailto:ab_at_eyescream.com
vice president, business development
t: (503) 292-6987 Ext. 16 / f: (503) 296-0945
traffic building, strategic partnering, new media planning,
killer creative and design that will make you s/c/r/e/a/m
portland, oregon (usa)
----------< http://www.eyescream.com >-------------
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