CPA: Trend Or Permanent Move?

There is, once again, an increase in the market of CPA deals. This generally happens in a down market, when less inventory can be sold on a CPM basis due to market weakness.

Mark Kvamme of Sequoia opined at a AAAAs management lunch in San Francisco last week that CPA would be THE sales metric of the future. (Sequoia is an investor in AdBrite which, according to Kvamme, is selling more and more CPA activity).

We don't agree that CPA will be the only sales metric of the future. There are two reasons for this: First, we can sometimes make better deals with CPM-based buys and second, sites cannot see the full picture from a metrics standpoint and CPA represents only a single dimension.

Better Deals With CPM Buys?

An astute buyer knows how to take a CPA buy and reverse-engineer it into a CPM buy based on acquisition rates and "allowables." We've always contended that with great creative and an aggressive buying stance, we can beat many CPA buys through CPM negotiations. There are, of course, exceptions. But CPM deals give the buyer more control via contextual, behavioral and relevancy targeting -- and if one can do so and reach or beat the CPA offered (or CPW, as we like to call it -- cost per whatever a client is measuring), then that's great.

CPA Only a Single Dimension?

The seller does not have access to an agencies' 3PAS (third party ad server) data. They cannot see view-through, are dependent on 3PAS functions like Atlas' Universal Action Tag to dedupe between networks (we don't think it is a good idea to let networks put their tags up on our client sites without the UAT controls), and cannot see the overall value of other actions besides the end CPW that we'd do a CPA deal on. The CPA deal might be done on a sale, but we might also value pages viewed, time spent on a site, downloads, requests for information or registration and other client engagement. Lastly, they cannot see the information the buyer sees relative to overall attribution management. The reality is that buyers will increasingly use attribution management tools to adjust the actual CPW to a virtual CPW based on consumer engagement with other elements of the buy before their transaction.

We're open to either technique. But we feel that CPM as a sales metrics will survive, although it will have to weather a big storm in the current downturn.

Tags: metrics
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1 comment about "CPA: Trend Or Permanent Move? ".
  1. Scott Hoffman from Lotame , December 16, 2008 at 5:34 p.m.

    David, great post and I couldn't agree with you more. The CPM structure will survive...there are never any absolutes in marketing. I love getting into conversations about CPA...here is how it always goes:

    ME...if a publisher is only paid based on an action...then that publisher has the right to show that advertisers ad wherever it will convert or where they have inventory

    CPA Advocate...agreed

    ME...like pages that have porn

    CPA Advocate...no way

    ME...then you agree that just the display of an ad has value, albeit in this case negative
    ...

    CPA Advocate...err, mmm, err

    The example is extreme, but it proves a point there is value to media outside of the CPA, both negative and positive...and value that's measurable in relation to brand awareness, recall, and intent; and for those marketers that want to unlock that value CPM will always play a role.