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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.
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