When a business starts investing in online media for the first time, the first step for its digital media specialist is to educate company management in cost per click (CPC, also known as pay per click or PPC) as a benchmark to establish the effectiveness of purchased media channels. A common challenge for first-time-online-media buyers is to evaluate media with CPC rather than a conversion metric.
The Usual Scenario
I have seen this happen over and over: a first-time media buyer at the management level is very skeptic about investing, say for example, $1.40 per click on an ad that may or may not lead to a sale. After the buyer finally commits to an initial purchase and receives the first report after the first trial period, he or she gets really excited that some conversions happen. Then, the manager is open to a higher budget. the cycle goes on and on, until the buyer starts forgetting about conversions and is willing to try just about any media channel because the CPC is just “too low that it is so worth it”.
CPA: A Viable Alternative to CPC
The initial gut reaction of the manager to evaluate any media channel in terms of whether it leads to a sale or not, is a correct one. While it is important to minimize costs in order to keep a sustainable operation, it is far more important to invest in advertising channels that actually lead to sales. A cost per acquisition networks, also known as a CPA network, is a publisher that only charges the advertiser when the publisher delivers an acqusition (or a conversion as mutually agreed between the publisher and advertiser.). CPA networks offer similar assets to CPC networks such as display banners, contextual advertising, mobile banners, leaderboards and social media.
CPA is an effective way of cost advertising because the publisher only gets paid when a channel delivers on conversion. An example of a CPA publisher is Statusmediaplc.com.