How to work on CPA deals in online marketing

As mentioned in some of my previous posts, online advertisers, affiliates and publishers use a wide range of payment calculation methods to price their online marketing campaigns. I have already explained what CPM stands for, so in this post I will try to explain CPA.

CPA, short for Cost Per Action (or in cases cost per acquisition) is a metric that measures how much you pay (or get paid) once a specified action (or acquisition) occurs. The action can be anything that you define, anything that is important to your business whether it’s a new client making a purchase, downloading an app or software, making a booking, a phone call or simply filling out a form to become a lead. In most campaigns however it usually refers to a new paying customer. Also if the action is defined as a lead registration rather than sale then the payment calculation will probably be referred to as a CPL (Cost Per Lead)

It is definitely considered to be one of the simplest and safest methods of running an online marketing campaign, because unless you get the action that you specified, you don’t have to pay. This makes planning and budgeting a campaign around CPA goals much easier both everyone involved. It’s a no-brainer why this is a great deal for advertisers as it allows them to have a clear idea what to expect for the amount of money they are willing to spend and plan their entire campaign strategy around this. As such I don't think I need to spend any time explaining a concept as simple as that.

I believe it’s more important to focus on the fact that CPA deals are also potentially great for publishers because they allow them to identify exactly what they need to deliver to their advertisers in order for them to get paid, but also to satisfy those same advertisers and get them to return and renew their campaigns on a monthly basis. Confident publishers, who know the quality of their traffic and how that traffic usually converts usually jump at the opportunity to work on CPA. This last part is also especially helpful to affiliates that are using their own resources (traffic, money, time) to generate commission income from affiliate programs.

If you are an affiliate or a publisher with high quality traffic that you know converts very well, a good CPA deal can make you a lot of money as you can optimize your campaign for conversions and make a lot more money.

Take the scenario below as an example:

As a publisher, you have been offered a nice CPA deal while you usually work on a CPM model. How can this CPA deal be better for you and make you more money? It all depends on the quality of your traffic and nobody knows that better than you. Let’s assume that you usually sell banner ad impressions on your site for $5 CPM. In order for you to make $500 you would have to sell 100,000 banner ad impressions.

If you were offered a CPA of $100 you could make the same amount by completing five of the defined actions. Depending on what your average Click-Through Ratio (CTR) is and what the average conversion ratio for your traffic usually is, you can estimate how possible it is to actually generate more than five actions using those same 100,000 banner impressions. Any action generated more than five is additional income for you, which you wouldn't be receiving if you were working on a standard CPM deal.

Some simple math:

100,000 Banner Impressions @ 3% CTR = 3000 clicks. Assuming just a 5% click-to-lead ratio, this would generate about 150 leads. A lead-to-action conversion ratio of 6% would generate 9 desired actions. At $100 CPA that’s $900 VS the $500 you would would have made by selling the same traffic on a standard CPM deal.

Now granted, in the example above I just used average industry figures for CTR, click-to-lead and lead-to-action ratios. You know your traffic better than anyone, use the formula above but substitute the figures applicable for your traffic to calculate what makes sense for you. Depending on the content of your site and the product you are promoting you may have lower CTR but higher conversion ratios or the other way around. It might also be that you need a higher CPA for this to work, for example a campaign with a lower CTR or conversion ratio might still make sense if the CPA is $150 instead of $100.

I am sure you can see the appeal and the great earning potential of a good CPA deal. Lastly I would just like to list some of the benefits for affiliates to being paid on CPA rather than Revenue Sharing:

• Faster commission generation – As soon as the defined action takes place you have already earned your commission.
• Less dependence on third parties – You get your commission when the defined action happened without having to worry about what happens next. You don’t need to wait until “if and when” the business will start making money in order for you to get paid.
• Lower Risk – You will lose less money if the advertiser or affiliate program, for whatever reason, decides to stop working with you as you will not miss out on revenue that you would might have received in the future

I will be discussing Revenue Sharing and other affiliate commission calculation methods in a different post in the next few days.

Infographic on Mobile Marketing and the Magic of Push Notifications

Global-marketing company Responsys, surveyed 1,200 adults and found that almost six in 10 adults have downloaded apps from their favorite brands and of those who have downloaded apps, seven in 10 have enabled push notifications. Those percentages are higher when only the younger set is surveyed.

Take a look at the infographic from Responsys to see what compels consumers to download a brand's app and then why they consider push notifications from those apps to be useful. 

Online Affiliates Recruiting Process

This post is geared towards those of you who already have an affiliate program setup to promote your product or service via the internet but not getting the desired results. I will be writing a separate post on how to setup an affiliate program from scratch later on for those of you who don't have one or are not sold on the idea yet.

So you you took the time and setup an affiliate program for your business and you are now looking to get affiliates to sign up and start promoting your site. Unless you have a lot of brand recognition that will get people to your site and inquire about your affiliate program directly, you will need to go out there and start promoting it in order to make sure that potential affiliates know about your offer and potentially signup.

• Contact Website Owner / Potential Affiliate and explain the following key advantages of your Affiliate Program:
  
  

  i. What makes your product/ service unique and sets you apart from competitors

  ii. Discuss technical details of your website, any awards or key technologies that you use.

  iii. Make sure that you mention that you offer affiliate support staff that will always be available to assist

  iv. Mention details about the affiliate system you are using and how the back-office reporting system works

  v. Explain that they will be getting accurate statistics and full performance reports for the business they introduce to you

  vi. Offer to assist webmasters with optimizing their website to promote your product. Some people may have reservations about how well they can do this on their own.

  vii. Offer help on design including the creation of custom creative and marketing tools (banners, scripts, website design, text copyright, widgets) specially designed for the affiliate’s website or online marketing requirements. Free assistance and online support in website development

  viii. Most importantly make sure that you emphasize that they will receive their commission payments quickly and efficiently. Affiliates want to make sure that once they start generating business for you they will be getting paid quickly and efficiently.

• Discuss the commission calculation program that best fits their needs (Revenue Sharing, CPA, CPL)
• Assist them with signing up to the Affiliate program and guide them through the registration process
• Once approved, the Affiliate should receive an email with his login details for the affiliate system
• The Affiliate will now be able to log in and generate tracking links, access statistics, available creative material and other marketing tools.
• Any request for a customized creative material or other marketing tools must be sent via email to his account manager

The Affiliate is now ready to start promoting your business. Its important that you follow up and support him until you are sure that he is confident enough to do it on his own. Experienced website owners that may have dealt with affiliate programs before will need almost no support, but there are those who will be new to this and it will be your responsibility to guide them and assist them to be successful.

Don't forget that if your affiliates are successful it means that so are you. If they are generating commission it means that they are successfully sending business to you. 

Online Media Buying 101 (... for Dummies)

It is very important to be consistent when preparing to launch new online marketing campaigns. In order for you to be able to make an informed decision on which campaign will work best for you, you will need to compare a few of them. In order to make the right choice you can't compare apples with oranges and thus you will need to collect the same information from every website and publisher. When negotiating directly with publishers, you must try and negotiate deals by following the guidelines below as much as you can in order to be as consistent as possible. For the purpose of this post I will assume you are looking to buy banner ads to promote an e-commerce website and generate ROI. Depending on what you are looking to achieve from your marketing campaign some of the items below might be slightly different but the general idea will always be the same.

The main things you will need to look at when negotiating a new campaign are the following:

• Media Kit – Every site usually has a presentation that contains all relevant advertising information. You should always ask for this as soon as you contact a new site. This usually contains information like: total number of unique visitors to the site per month, geographic location and demographics of their audience (male, female, age group, etc.). This will not only help you get a better idea of what the publisher can offer you in terms of exposure, it will also tell you if your target audience is looking at that site.
• Banner Size – Bigger is always better in online advertising so always try and get a banner that will not disappear on the site. Usually the bigger the size of the banner the higher the price as well so you will need to find that sweet spot where you get the biggest size at the most reasonable price. Don't forget that paying too much is not a guaranty of success and in fact most of the time is quite the opposite.
• Banner Location – Banners near the top of the page usually do better than the ones on the bottom. Always try to go for the banners above the fold. Meaning the banners you can see on a site without having to scroll down.
• Additional Exposure – When negotiating to buy a banner, always try and get some additional inventory for free. Ask for a text review of our site to be posted on their site or links pointing to our site. This will not only increase your exposure on the site during your campaign but also help with SEO as search engines love to find links and content about your site on third party sites.
• Test Campaigns – Whenever you start working with a new site or finalize a new campaign, you must always insist on running a test campaign. Basically, most sites will offer you lower advertising rates so you can run a campaign on their site and evaluate their performance. You will have to push in order to get a really good rate.
• Payment Method – You will need to decide which payment method you feel most comfortable using CPM, CPC, CPA and Flat Rate. For new campaigns and when working with publishers that you are not familiar with I would usually suggest avoiding to work on Flat Rate deals because as the name implies, the campaign payment terms do not depend on delivering specific amount of exposure or results. You get the commitment that your ad will be displayed for a specific amount of time but no other guaranties 

Remember to constantly try and take advantage of any discounts the publisher may be willing to offer. Everything in online media is negotiable so it’s always OK to say that their original asking price is too high and keep pushing for a rate that you are more comfortable with.

Things you will need to pay attention to later on when the campaign is live:

• Click-through-ratio (CTR) – most commonly defined as numbers of clicks divided by number of impressions.
• Click-to-lead ratio – the percentage of how many people successfully registered after clicking our banner.
• Conversion ratio – the percentage of active users from registrations; after people clicked on your banner, how many of them signed up? And after they signed  up, how many of them became actual clients.
• Other Key Performance Indicators (KPIs) relevant to your business or website. Things like free downloads, demo accounts, email subscriptions, likes or followers

For most online marketing campaigns the main focus should always be the results, so if during the course of the campaign you feel that something is not performing, then you should pause the campaign and make changes so that it performs better. Sometimes just changing the banner makes a big difference. Sometimes its the landing page or the message on the ad. You will need to keep making changes and keep optimizing the performance of the campaign while its running until you hit an acceptable performance.

Never wait until a campaign is finished running to evaluate if it was good or bad. You have access to valuable performance data from your marketing suite, your tracking links, analytic software that you should use daily to help you modify and improve your campaign.

What does CPM stand for?

Online advertisers and publishers use a wide range of payment calculation methods to price their online marketing campaigns. In recent years, it has been calculated by advertisers that more than 30% of all online advertising transactions are being negotiated on a cost-per-impression basis. An impression is a single appearance of an advertisement on a web page. In order to count the impressions served as accurately as possible and prevent fraud, an ad server may exclude certain non-qualifying activities such as page-refreshes or other user actions from counting as impressions. This sometimes may lead to a bit of inconsistency of how impressions are calculated but in general the deviation is not very significant.

Cost Per Thousand Impressions (CPM) is most frequently used in advertising to represent the cost per thousand (M is the roman numeral of 1,000). When used in online advertising it relates to the cost per thousand ad impressions. 

Working on CPM means that you have to pay a fee for every 1,000 impressions of your ad. One impression equals one display of your banner. So for example, $3 CPM means that once your ad is displayed 1,000 times you will pay the publisher $3.

CPM = (Cost/ # of impressions) x 1,000

Its always useful to take various elements into account when buying online advertising on a CPM basis.

For example lets assume you have a budget of $1,000 and you are offered a rate of $5 CPM. With this rate your budget will buy you 200,000 ad impressions. Depending on the size and popularity of the site, the total number of monthly ad impressions and how many unique visitors the site gets per month, 200,000 impressions may be enough to get a good amount of exposure or maybe not even be enough to make a dent.

For example if the site serves 1,000,000 impressions per month then your 200,000 is 20% of their entire inventory which will get you a good amount of exposure. However if you are dealing with a larger site that serves 10,000,000 impressions per month then your 2% of their ad inventory will hardly make any impact.

The site's number of unique visitors is also very important to take into account. If a site has a lot of users who visit the site frequently on a monthly basis or refresh pages often during each session, it means that a lot of the impressions you are buying are actually generated by the same people. Displaying your ad to the same person over and over again is not very useful and diminishes the effectiveness of your campaign.

What's worse, it also means that you are wasting impressions that could have been more effective if the ad had been seen by someone else. That's why is always advisable to add a daily ad display cap per user or buy unique impressions when available. Sites with good ad servers can accommodate both of these requirements and this will help insure that you get the most out of your budget.

I will discuss other payment methods such as CPA, CPL & CPC in follow up posts over the next few days.

Dynamic Pricing CPM campaigns (dCPM). Great deal or rip off?

This will be the first part of a series of posts where I will get into a bit more detail about various aspects of running online marketing campaigns. I will try and post one of these per week and the goal will be to cover each item in some detail, explain some of the advantages, things to look out for and in the end give you my own personal take based on my experience so far. If you are not familiar with some of the terminology I will be posting a glossary as part of this blog which you can use as reference. You can also contact me directly and I will do my best to explain things in further detail.

So here goes: Dynamic Pricing CPM (dCPM) campaigns.

Dynamic pricing allows networks to vary the CPM price on each ad call (bidding price). Think of it as a giant auction for online media. Publishers open their inventory to the network's ad exchange which in turn allows advertisers to bid on that inventory.

The entire process is automated so the only thing you need to do, in theory, is agree on the maximum average CPM to be paid for each creative size, and the network will do it's best to lower the price of the inventory in order to hit your ROI goals.

Most networks will claim that the initial first few days of any campaign is a learning period during which their ad server is determining the variables that lead to conversions (such as content, user behavior, frequency, geographical data, time of day, etc).

So far so good, and in theory this all sound very appealing, as this model appears to give you the best of everything: you get to set your own price, target the audience based on the demographic that you want and get more bang for your buck; as this is supposed to be an auction based system that will get you more impressions for the average CPM that you specified.

Now, as you have noticed above, I highlighted the phrase "average CPM", because what usually happens is that networks tend to optimize campaigns based on what is most profitable for them and not what you really need. Effectively what I have seen from a lot of these networks is that they will push more expensive ads to your site, where they actually have a much higher profit margin and then they will also deliver a huge amount of very cheap worthless traffic in order to drive the average CPM price down. At the end of the day they will come to you and say that the hit your CPM target but you will be left wondering what went wrong. The quality and sources of traffic vary so much that there is no way to gauge if a campaign will work for you or not.

Now don't get me wrong, some times depending on what the objective of your campaign is, this model can be useful. If you want to increase exposure and traffic to your site targeting a specific geographical area or demographic and you want your ads to appear on a variety of publishers, this type of campaigns might help. However if you have clear targets on conversions that you need to achieve or looking to generate specific ROI, then I don't recommend working on a dCPM model. There are too many variables that are out of your control which will end up working against your campaign. 

In my opinion, nothing beats going out, negotiating with highly targeted publishers directly and agreeing on a specific CPM rates. That way you know what to expect based on your own KPIs. You know your site and how targeted traffic usually converts, thus you will be able to plan and budget accordingly. The dCPM model might get you more impressions for your dollar but its usually not the impressions you are looking for.