For the record, let me state my opinion of performance-based marketing upfront. In theory, it's a perfectly reasonable way to ensure spending is tied to backend ROI in a highly measurable medium. Of course, the "theory" that the world was flat worked well for many years. But that didn't make it true.
Nevertheless, Internet marketers young and old continue to hawk CPA deals as if they were slam-dunks for all of us starving publishers. They claim to see 1% click-through rates and 30% conversion rates, when the reality is more like .5% click-through rates and 5% conversion rates. Despite these problems, you can occasionally stumble across a CPA deal that makes good business sense for all parties.
Identifying the CPA campaigns that have a reasonable likelihood of success is an art form. It takes (Internet) years of experience. But, I'm a friendly guy and I'm here to help.
Here's my own personal four point vetting process. One day, I'll come up with a clever name for it.
1) Establish the consumer viability of the offer.
The viability of the offer is a function of its attractiveness to the consumer and its ease of completion. First, is there a significant enough audience of potential consumers online that would respond to this offer? Last week, I had a potential advertiser offer a campaign that paid per sale on the purchase of a diploma frame. I had to wonder how large the global market for diploma frames is. I respectfully declined that campaign.
The second part of consumer viability is whether the advertiser's site or landing page is conducive to the completion of the desired task (purchase, registration, etc). Is the page overly cluttered? Does it spawn pop-ups that distract the consumer from achieving the goal? Any of these are a hurdle to a conversion and a warning sign that the deal's likely a dog.
2) Identify the source of the offer.
The CPA world is full of devious and deceitful critters. Layers upon layers of brokers sitting in the middle are of no benefit to anyone.
Frequently, brokered CPA deals become a twisted game of telephone we all played as kids. One recent example: a request for 200,000 site registrations for a major media company came to us through a broker. We were told that users could be given an incentive to register and we needed to drive large volumes of registrations in a short period of time.
Unfortunately, the source of the offer (that major media company) had a different view of things. They were "ramping down" their promotional efforts due to a site redesign and had a strict prohibition on offering incentives for registrations. I wouldn't want to be the publisher who generated those 200,000 registrations and was waiting for the check to come from a broker who never had the authority to sign the business. Something tells me the check will never come.
3) Ensure fair compensation metrics exist.
There is plenty of variability in how CPA deals are structured. But the bottom line is that compensation needs to reflect a fair percentage of the value of the customer, and it needs to back into fair recompense for the media used to promote the offer.
Recent offerings make it clear that some folks trying to make a living in the CPA world don't even bother to think about this. One travel company recently announced that they would pay $2.50 on the sale of an airline ticket and $1 on bookings of car rentals and hotels. Sound like a winner?
4) Research the market for competitive offers.
CPA offers are most likely to succeed when they are relatively unique. If the medium is cluttered with offers from a dozen competitors, the signal-to-noise ratio is simply going to be too low. If the current offer has a clearly communicated competitive advantage over others in the space, the clutter can be overcome.
Based on this 4-step qualification process, we see that a CPA deal that is consumer-friendly, is direct from the advertiser, pays fairly, and is unique, has a good chance for success. If any one of these winning characteristics are lacking, you're more likely to lay a rotten egg than a golden one.