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It's CPA Time... or Is It?

  |  January 1, 2001   |  Comments

CPA deals might be fun for a while, but find out why Kim thinks they could spell the ultimate death of acquisitions email marketing.

No, I'm not talking about the upcoming tax season or your accountant. I'm talking about cost per acquisition (CPA). And, for purposes of this article, I'm talking about email.

Email marketers as of late have requested more and more CPA deals. And why not? They're seemingly great deals if marketers can get them. After all, the standard acquisitions email campaign, paid for on a CPM basis, reaches more nonresponders than responders. Why pay for all those extra eyeballs?

Sure, it sounds good on paper, but let me play contrarian. In my opinion, there is at least one very good reason why CPA deals may NOT be the silver bullet of the online ad world.

Think quantity.

CPA deals pay off because marketers have to pay for only registered leads or sales. What's not to like about that?

Do the math. It takes a ton of volume, in most cases, for marketers to reach their goals. That volume is made up of real people. These people may have opted in, but it doesn't mean they want to be bombarded again and again.

Suppose just one savvy marketer worked out a $10 CPA deal with a list vendor. In this hypothetical example, the goal of savvy marketer Sam is to acquire 10,000 new leads at that rate. Say the promotion is projected to hit a 5 percent click-through rate and a 50 percent registration/conversion rate, which is well within the averages for acquisitions promos these days.

That means Sam would need to send his message to 400,000 people, of which 20,000 would click through to the registration page.

This is where it gets dicey.

Considering that less-popular category selects may have only 100,000 or less email addresses to offer, Sam would be out of luck if he were marketing a niche product or service, or the list vendor would need to cross into other categories.

Dicey, Part 2.

Let's address the first potential problem. If list vendors offered CPA deals on a regular basis to all of their clients, they'd be emailing huge quantities of people from their database over and over again. Do you really think that members and subscribers actually want to receive 5 to 10 or more messages a day from just one list provider?

And we're just looking at this from the message recipient's point of view. What about the list vendors themselves? How do they maintain their lists with what's sure to be huge unsubscribe rates with this type of scenario? And how do they make it profitable for themselves?

Consider the example above. Sure, Sam's campaign is bringing the list vendor $100,000 in revenue -- but at what actual price? It doesn't do the vendor a whole lot of good if he or she is going to lose 25 percent or more of his or her list every month.

And as for the individual category quantities and what the vendor might do should a category fall short -- yikes!

Getting back to that same example above, suppose Sam's audience is made up of vintage-car aficionados. (I know, I know -- it's unlikely Sam would have a $100,000 email budget. This is just an example; work with me here.) Say the list vendor can't find 400,000 in that category in order for Sam to get his 10,000 leads. So he digs into other auto-themed categories, such as luxury cars, sports cars, and even auto parts and auto products.

Uh, excuse me! What's wrong with this picture?

You got it. It's the "s" word, plain and simple. A rather subtle usage of it, but it's still spam nonetheless.

Not that I believe for a moment that every list vendor out there is willing to sell its members' souls for some cold, hard cash. Most of the biggest and most reputable list vendors (e.g., yesmail.com, PostMasterDirect.com, etc.) play by the rules. And the main rule is "Don't send messages that members have not requested."

In other words, if I, as a list member, have opted in to receive promotions and announcements on gardening and that is the only category I've opted in to, you'd better not send me one email on anything but gardening.

It really boils down to list vendors potentially overtaxing and/or spamming their lists. And in this somewhat precarious age -- where the economy is shifting and email marketing, in general, is experiencing some growing pains -- why mess with what is still a good thing?

Sure, CPA deals could be fun for a while, but in the long run, they could spell the death of acquisitions email marketing.

Now put that in your New Year's pipe and smoke it.

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ABOUT THE AUTHOR

Kim MacPherson

Kim MacPherson is President and Founder of Inbox Interactive, a full-service email marketing agency specializing in promotional copywriting, HTML design, planning, and deployment/tracking solutions. Kim is also the author of "Permission-Based E-mail Marketing That Works!"

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