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CPA is good for publishers, the next stage in online advertising! Online search has come to be a mature marketing & advertising channel, a compelling opportunity that drives both branding and sales results. CPA (Cost- per- acquisition) is the new standard for affordable, targeted and effective advertising, being adopted by all major search engines. The CPC (Cost per Click) model which was widely used earlier is prone to issues of click fraud and other critically contentious issues. Hence, the opportunities offered by the CPA (Cost per Action/Acquisition) model must be explored.
CPA model provides action/acquisition opportunities by offering financial incentives to publishers, usually in the form of a revenue share percentage. These Incentives are solely based on actions such as driving sign-ups, downloads, inquiries or ultimately acquiring paying customers. Here the responsibility is on the publisher. The advertiser posts his add on the publishers web page. If any of the above acquiring actions originate from that particular page, the publisher receives a commission. So, for better commissions a publisher needs to generate better conversion rates from the ads. This way CPA also remains virtually risk-free for the advertiser.
Google has recently acknowledged that it is testing CPA..This should make CPA more popular, because it will lure publishers by promising them a position in the top search results.
The figure an advertiser is willing to pay for a conversion (such as a purchase or sign up) to the publisher is the maximum cost-per-acquisition (CPA) bid . When you enable the Conversion Optimizer Beta for a campaign, you set a maximum CPA bid for each ad group. However, you still pay only for clicks, not for conversions.
Also keep in mind that the costs incurred by you depend on factors that are not within the control of Google, such as changes in users' behavior and any alterations made to your site. If these factors cause your actual conversion rate to be lower than the Conversion Optimizer predicts, your actual CPA may exceed your maximum CPA bid. However, the Conversion Optimizer automatically adjusts your cost-per-click (CPC) bids over time, based on recent conversion data, with the goal of keeping your average CPA under your specified bid.
However, there are a few concerns. For instance, CPA is difficult to manage. And why must the publishers be responsible for closing a deal too. their job must end at influencing the consumer. Also, CPA though currently more immune to fraud than CPC, soon there will be people will who will figure out ways to cheat CPA too. Another disadvantage is that CPA is only available to medium or large businesses, as small businesses can't afford to pay relatively high CPA premiums to publishers. Also, CPA is still being explored and there can be no guarantee for it's success as the tracking technology hasn't yet matured into something robust and reliable.
Publishers dislike CPA for reasons of their own. Unless they generate revenue for the advertiser, they themselves receive no renumeration for even displaying the advertisement. Also, the revenue generated via CPA is meager. Another disadvantage is that the publisher has to depend on the advertisers figures to know the number of actions generated from the publishers source.
Hence, CPA is the next big thing but not the Panacea to Online advertising Fraud. There definitely are better things to come!
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