For quite some time marketers — particularly client-side marketers — have believed they can simply purchase customers outright online. I’m sure we’ve all heard these words at one time or another: “We are not interested in CPM media buys online, we only want CPA buys. We’ll do general advertising offline.” This statement will frustrate the most stoic of media professionals. However, I believe there is a place for cost-per-action (CPA) programs within an overall media campaign and will try to give a few examples of how we’ve used them lately.
First, let me briefly explain what CPA means here. Basically, it means paying on the basis of a specific completed activity. Many look at CPA buys and immediately think of a paid client acquisition. That’s not always the case. We have used (and continue to use) CPA buys to:
- Acquire qualified database entrants (e.g., opt-in email address)
- Drive sign-ups for a free trial
- Drive site registrants
- Acquire paying customers
- Drive downloads of a white paper or software
- Drive volume to a call center
- Drive inquiries for email or personal follow-up
We had a situation recently in which a client was running an online contest, and a publisher backed out of accepting the advertising at the 11th hour based on a potential conflict. We had projected a significant amount of very targeted reach from this publisher. Additionally, due to the level of targeting, we had projected a large volume of contest entries.
We discussed the situation internally and determined duplicating the targeted reach, let alone the contest entries, would be next to impossible with another vendor. A viable solution: Purchase entries on a CPA basis. We would be able to increase the amount of general advertising in-market by hundreds of millions of impressions while guaranteeing we met our goal for contest entries. In fact, the mass amount of communication the vendor would require in-market to achieve our CPA goals would likely have the ancillary benefit of over-delivering on the other goals. This is a good illustration of how a CPA buy can complement a targeted media buy.
Another common example of CPA use around here is when a client’s goal revolves around database population: “I want to acquire subscribers to my site’s newsletter.” In a case like this, we will develop our strategies to meet this objective. More often than not, when working up a plan, we find the numbers just don’t allow us to make standard CPM buys. Once you reduce the projected number of impressions by things such as CTRs, view-through rates, and conversion rates, you are left with a cost per lead a Mercedes dealer would balk at.
This is the perfect application for CPA. The action in this case may be a co-registration program (a user opts in to indicate interest in a product or service, is sent a follow up to confirm said interest, and upon confirmation is passed to the client for recontact). However, we prefer to have all data capture occur at the client’s site. This scenario tends to be a bit more expensive, but the quality of the lead is much better.
Finally, of course, is the case of buying based on transactions, that is, paying customers. This is not as easy as our clients want to think, but it certainly can be done. At our agency, we believe if we deliver a more qualified audience, these people will more likely convert to customers. Because of that, you will almost always find components of our plans that are extremely focused on the target audience (see my last column for our approach on targeting).
However, it is not always possible to achieve the goals at hand with highly targeted, CPM-based media. In a recent initiative we successfully layered a CPA component over the rest of the media plan, which consisted of targeted CPM-based buys and enterprise-wide portal agreements. We achieved outstanding results.
The role CPA played was first and foremost to drive paid transactions. It did so in spades. However, another key strategy was to ensure large amounts of communication were in market during critical times of the client’s key selling season. The CPA component delivered there as well. The ancillary conversions generated from the excess communication went toward helping our client meet its overall goal. The CPA agreements went toward helping us exceed our target goal. In the end, we can point directly to the CPA component of the plan as the reason we more than doubled our target goal at an overall CPA that was far less than the client had seen before.
As the results suggest, there is indeed a place for CPA in your media plan.
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