Who’s Really Winning If CPA Programs Rule?

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joannaoconnelrevised"Marketer's Note" is a weekly column informing marketers about the rapidly evolving, digital marketing technology ecosystem. It is written by Joanna O'Connell, Director of Research, AdExchanger Research.  

I was inspired by this week’s AdExchanger comic, which features “Mr. CPA” on the top of the mythic Mr. Universe winner’s podium, to comment on the market’s continued obsession with CPC and CPA programs.

When I was a media planner and buyer back in the mid-2000’s, and I had a very aggressive direct response client who demanded high volumes of sign-ups and high expenditures of budget, I found myself laying down vast amounts of money to dozens of ad networks at a time to meet my client’s requirements. CPM, CPC, and CPA programs were all in the mix. I really had no idea what was being done behind the scenes, I just knew that I was meeting my client’s goals. Of course, when they asked me why something was working, or, why all of a sudden something wasn’t working, I had no idea.  I had no visibility and no control.  Who knows, maybe one of my CPA partners turned remarketing back on to up their performance, even though I’d told them not to, or one of the ops guys managing my campaign went on vacation and left no one at the helm of my program, leaving it to tank.  Frustrating, yes, but this is what was available to the buying community at the time.

Today, we the buyers have platforms that allow us to accomplish many of the same things, without necessitating the use of CPC and CPA programs. We can access wide swaths of inventory – through both open exchanges and direct publisher deals – point our technologies to optimize toward specific campaign goals, and make as many real time changes as are warranted, all with an eye toward driving meaningful conversions which are being carefully tracked using an advanced attribution system. (Yes, I said it!  Down with last click!) In fact, ideally that post-attributed data is then being pushed right back into the buying platform to create a closed feedback loop of buying, optimization and performance assessment.


This week's Marketer's Note is underwritten by Turn.

Forbes Insights and Turn Report: Get more out of your marketing and maintain customer trust. Visit www.Turn.com.


Tangentially, but related, while at a conference entirely dedicated to the fraud problem not too long ago, a group of panelists got into a heated discussion about who’s really responsible for fraud – “It’s the exchanges!" "It’s the networks!" "It’s the agencies!” “It’s all of us!” – and the point was raised that if agencies weren’t desperate to spend every cent hitting clients’ CPC goals they’d be far less likely to buy bad inventory (where faking clicks is awfully easy).  I immediately thought to myself, wait, there are still marketers out there optimizing to CPC? Why don’t they pick an optimization target that actually matters to their business, like incremental sales volume, increased ROAS, improved recall or purchase intent (proxies, yes, I know, but still better than CPC).  I was shocked. I left feeling like it was still 2005.

I’ll concede that there may be specific instances where such programs are warranted – note I used the phrase “many of the same things” above – maybe there’s inventory a specific partner has locked up that can’t be found elsewhere, for instance. But I fundamentally believe that reliance on CPC and CPA programs as the primary go-to-market media strategy isn’t good enough anymore, and puts marketers at risk of falling behind their competition – who ARE embracing a more hands on approach to media management – in the long term.

There, I said it.  I eagerly await the firestorm of angry comments in response!

Joanna

Follow Joanna O'Connell (@joannaoconnell ) and AdExchanger (@adexchanger) on Twitter. 

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12 Responses to “Who’s Really Winning If CPA Programs Rule?”


  1. John Were says:

    No angry comment here Joanna. If you're an advertising buying on a CPC or CPA you've got to be very wary of fraud. And if your purchased inventory or results are not fraudulent then you are likely giving away margin to media suppliers you could have kept in your business. Either way it's not a great idea.

    • Joanna says:

      Sure Cole - what I mean is that a buyer, whether it's an agency person, a marketer, whomever on the buy side is managing the program, actually logs into a buying platform him or herself to making buying and optimization decisions. This, as opposed to relying on an ad network on media partner to execute on their buying and optimization decisions.

  2. Stepan Gershuni says:

    Ignorance of the brands and agencies optimizing for CPC is allowing all those crappy unscrupulous exchanges to survive. Education of buyers is the only way to win here.

    • Joanna says:

      I second that, Stepan. Education. Ongoing, constant education. Listen, I get that there are very smart, well-informed buyers that determine that, in a given situation, for a specific reason, a CPA or CPC program might be warranted. But they are doing it with open eyes. My concern is that most are not doing it with open eyes.

  3. Phil Raby says:

    can I ask what if not CPA/CPC programs, what methods would you suggest are better - just out of interest?

    • Joanna says:

      I second that, Stepan. Education. Ongoing, constant education. Listen, I get that there are very smart, well-informed buyers that determine that, in a given situation, for a specific reason, a CPA or CPC program might be warranted. But they are doing it with open eyes. My concern is that most are not doing it with open eyes.

    • Joanna says:

      Hi there Phil - thanks for your question. I am advocating for impression-based buying, basically, CPM-based buying, as that really is the primary alternative. In some ways it can feel more "risky" than CPC and CPA ("Won't I be wasting money on impressions I don't need or want?"), I get that, but given the media management tools that are now available to buyers, and the degree of targeting that can be done, I think it's actually better to put in the time and energy to get really good at buying the right kinds of impressions rather than letting some external partner make those decisions for you.

  4. Eric says:

    While attribution techniques and more intelligent goal setting to prevent fraud are a very important next step in digital marketing, this has little to nothing to do with whether an advertiser makes purchases on a CPA or not. CPA is an accounting methodology, and can be delimited and controlled in the exact same way as any other method. Using dynamic cpm (since you're underwritten by turn, I'll assume this is what you're advocating) has no additional benefit over CPA in combating fraud or aligning more tightly with advertiser goals.

    • Joanna says:

      Eric - I respectfully - but completely - disagree. This is about transparency and control in the hands of the buyer, specifically the agency or marketer. CPA programs inherently limit transparency and control for those folks. That's fundamental to the nature of CPA programs - the ad network (or whomever is administrating over the CPA program) is the one making the buying and optimization decisions. It necessitates that the buyer simply trust that the best decisions are being made on an impression by impression basis, rather than being able to make those decisions themselves.

      • Jeremy says:

        Joanna - none of the companies offering an "advanced attribution system" you reference in your piece do anything of value that is different than historical models. Thus, the only benefit to dCPM is transparency (site, data, costs). Multi-touch or ROAS models are still rewarding vendors who correlate ad delivery to consumers that their algo determines are ready to take action. This is a far cry from a measurement system that rewards vendors for influencing consumers to take action. The only way to measure that effect is through experimental design (either direct or inferred control groups). I know of no entities that offer a transparent commercial solution built off experimental design.

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