There are several ways for online marketers to advertise, but from a risk/reward standpoint, Cost Per Acquisition (CPA) beats them all. But before I explain why, let’s first examine other online advertising methods and see what they give you for your money from a customer standpoint.
Cost Per Mille (CPM) allows advertisers to pay a set amount for 1,000 impressions of their ad. It might be good for branding, but there’s no guarantee that you will actually acquire a new customer. Besides, unless you’ve paid a higher CPM for placement on a specific Web site or you’ve been guaranteed your ad will be targeted to a specific audience, it’s more or less like throwing spaghetti on a wall to see what sticks. There’s no quality control over who is viewing these ads and no assurance that anyone will actually click on them to see what you’re offering.
We all know Cost Per Click (CPC) advertising works well for Google, but everyone knows that clicks don’t always convert. An advertiser might pay for thousands of clicks before ever making a sale, especially since CPC offers no protection from click-fraud or Web users who accidentally click on the ad and quickly close it out.
The Cost Per Lead (CPL) model is one step up from CPC, with advertisers paying only for customers who click on the ad and submit their contact info. But even though you may acquire customers’ details, you still need to convert them into a paying customer.
All of these methods have something in common: you’re paying for advertising and exposure but not necessarily new customers.
With CPA advertising, you only pay if you acquire a new customer. This cost-effective method gives you all of the branding benefits of CPM, CPC and CPL, but you get countless impressions and clicks absolutely free and only pay when you acquire a new customer that meets your specific requirements. CPA advertising is a high ROI opportunity with little risk and big rewards, which is especially compelling at a time when many online advertising budgets are being cut back due to the struggling economy.
So how can you optimize your ad to ensure the highest conversion rates? I’ll tell you all about it in my next post. Stay tuned.