Cost Per Action or CPA, also known as Pay Per Action or PPA, is now a current pricing trend in online advertising and marketing. With this pricing model, online advertisers are only required to pay for every action or conversion made on their ads in the internet such as product purchases, registration and submission of forms. This pricing model is a preferred method of the companies advertising certain goods and services as they get to make payments only when specific actions or conversions are made. Through this, they are also saved from the indiscriminate paying or spending of money on terms or advertisements which do not gain profits in the online market.
For website publishers, however, they take the risk of advertising as the commissions that they will receive will solely be based on the company's creative websites and offers. And unlike the Cost Per Click (CPC) model, CPA does not lend itself to deals on every click so they have to wait until actions are made through their websites.
Website publishers and marketers who still opt for Cost Per Action model are offered with several deals. Nonstandard offers are available to marketers with considerable amount of excess inventory. Those websites which feature incentive programs could also offer CPA models on several types of leads. There is also the most widespread or extensive kind of conversion-contingent pricing which is the so-called affiliate marketing. Through this deal, advertisers establish what actions should be done and how much they would be paying for each action.
For any interested publishers who choose this kind of pricing, there are certain guidelines to be followed on how to apportion the advertising risk or how to proportionally charge companies or advertisers. The most possible and simplest equation that could be given for this is: X/ 1000 * CPM + Z (pricing benchmark, where X stands for the number of impressions to be sold)
X* 1.25=Y (expected conversion yield)
Z/Y= target cost per click
To simply put, a site publisher could multiply the number of intended impression size and multiply it by 1.25% which is the estimated percentage of actions/ conversions per ad campaign. Doing this would lead to the expected click yield that would reveal the price impression of each click. There are also a number of sites who offer premium from 15 to up to 50% to any performance-based deals. This depends on the size of the buy and the number of successful returns in every action.
The drawback in this Cost Per Action model is that most publishers do not have blow-by-blow information of the transactions made by their visitors or audience so they cannot assume that the number of actions given by the advertisers is indeed equivalent to the actual conversions made.
To solve this pricing problem, publishers are advised to make sure that they have a way of monitoring the actual performance or conversions made in their website. And, they also need to be really committed in tracking their audiences and understanding their performances to maximize the advertising potential of their website.
Sponsors
|
|
|
|
|
|
|
|
|
|
Advertise Here