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  1. #1
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    Advertising vs FREE Traffic.
    The CPA model is a great one for a merchant to get FREE traffic at the expense of so-called 'affiliates.' It's just the standard 'agency' type situation prevalent in Insurance taken to the internet.

    However it has it's problems. But it still can be highly profitable at times and a major drain on capital at other times.

    One of the main problems is survival of the 'affiliates.' Now in our culture, merchants do not care ... it's not their problem. But whether a business succeeds or not is almost always based on people knowing it exists and if they deal with this business - what's in it for them.

    In this market, impressions are down some, just like they were in the last dotcom disaster but what I am seeing is CLICK THRUS are falling at a rate
    that I have not seen in over 15 years of being online. They are horrendous.
    And it is not from just banners or text ads or search ... it's from all areas.

    No click thrus and NO ONE will sell much of anything. Ebay had it's lowest
    traffic rate ever according to their last quarterly report. Part of that was their own stupidity but part was also people not click over.

    So, my prediction from 9 years ago looks to be about to come true. The only way AFFILIATES in general can survive is thru straight up ADVERTISING, just like TV, Cable and Print. Now print advertising is a disaster for only one reason, the RATES are deemed excessive and the publishers are loath to drop them to what the market is willing to pay.

    (Sidebar: It's amazing how capitalist do not understand capitalism and the market.)

    There are a number of sources of CPM ads ... basically ad agencies. However, what I am interested in is AD PRICING. Should leaderboards command a higher price than 125x125 ... Does one price fit all.

    Also, at what price does the branding effect of straight up advertising make doing it worthwhile while still generating enough visitor traffic to make some sales.

    Here's some ideas ... Leaderboard at top $5/CPM ... below the fold $2.50/CPM
    or would just $3/CPM be better. 125x125 banners? What would be a fair rate? What about 250x250 or 300x250 or 120x600?

    At some price the cost per click thru is better with CPM than not. You have 1,000 impressions at say $3/CPM. You get 1% CTR ... you got 10 click thrus.
    That figures at 30 cents per click. You get 2% you get 20 or 15 cents per click and so on.

    Are you as a merchant really better off paying an affiliate $10 for a sales or $3 for exposing your offer to 1,000 and making one sale?

    What do you all think? Obvisoulsy some CPA is profitable, but not all of it. While ALL Advertising is revenue for affiliates who get advertisers to post ads on their sites.

  2. #2
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    For affiliates, there's all of what you mentioned, the usual stuff like SEO, PPC etc. and new stuff like social media, old school stuff. Lots of ways to generate traffic.

    For merchants, CPA is always the best because they only pay for actual performance. Run right, where there is no cannibalization of a merchants traffic sources, there is nothing better out there.

  3. #3
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    Having spent many years working at/with newspapers, I can shed a little light on the print-advertising side of things.

    Now print advertising is a disaster for only one reason, the RATES are deemed excessive and the publishers are loath to drop them to what the market is willing to pay.
    Yes, print advertising is pricey. But enough advertisers are willing to pay those rates because they know that as long as newspapers have readers (even though that number is shrinking), newspaper ads are still effective.

    Although I had plenty of advertisers wishing they could track the explicit effectiveness of their print ads, they still noticed a general effectiveness of their ads. Or in other words, they noticed a significant decrease in traffic/sales when they stopped running their ads. In a way, newspapers have that advantage over performance-based campaigns. With performance-based campaigns, if the campaign can't account for every action, the advertiser may view it as an unsuccessful campaign. There is no built-in leeway like there is with print ads.

    I think there should be some middle ground. If newspapers were to move to a completely performance-based model, they wouldn't be able to bring in enough ad revenues to stay in business. But they should still try to track effectiveness where they can, a la online. And likewise, I think online marketing should, as you've suggested, adopt some marketing approaches that build awareness, rather than just performance.

    Billboard companies put up random information on their open boards sometimes and then survey people about that info before and after the campaign. They clearly show that billboards are very effective at building awareness, even if they can't track actual actions that come from those. Branding can be just as important in advertising, and that's something that online publishers don't usually get compensated for if they are just using a CPA model.

    I've noticed newspapers have been moving away from a flat weekly or monthly fee for online ads to CPM ads. When asked whether any of them will move to a CPC model, they've all told me no way. They are afraid that if they do, they won't be able to make much money at it. And as soon as they allow their advertisers to pay for just clicks, they won't be able to go back to charging for impressions. I think they should keep selling their ads for whatever they can (and acknowledge the branding benefit), but also open themselves up to run ads from affiliate networks, as long as the ads don't cheapen their sites.

  4. #4
    The "other" left wing davidh's Avatar
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    Interesting topic for discussion, and lots of food for thought. But the banner CPM rates mentioned here are far from "real world" rates.

    If you can show me where to get $5 CPM for a leaderboard, I'll give you a 95% share on the ones I run, and send you an over-the-top christmas present every year.
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  5. #5
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    David ... go to Advertising.com and sign up. They spin some pretty high priced banners. I guarantee you those General Motor banners you see clogging up NFL.com
    cost more than $5/CPM.

    Trusty ... you are right that CPA can be lucrative for a niche or a person who is very skilled at it ... but as a general model for an industry it has more holes than SWISS cheese. The fundamental question for both merchants and affiliates is CAN you cover your costs on a consistent basis with CPA and still maintain a large branding presence?

    For some maybe yes, but for most no way.

    The survival of the industry depends on a workable solution to this problem. Why would EBAY and Google drop thousands of CPA affiliates and for ADSENSE type ads?

    The logical answer is they make more money per visitor ... although nothing about either one is ever logical.

  6. #6
    Full Member OICUAM2's Avatar
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    The rate depends on what type of site it is.

    A site could have teenagers sharing photos or investors looking for a new trading platform.

    Advertising in local newspapers works for some local and national branding, but if you have a limited budget, I suggest not testing a website offer. Most people won't keep your ad in mind long enough to go online and visit your site after seeing a newspaper ad.

    Hopefully advertisers will recognize the better tracking and conversion rates from online ads so they will be willing to pay more for online ads compared to newsapaper ads.
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  7. #7
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    As David Ogilvy is supposed to have said: "50% of all advertising works. The question is which 50%."

    As for this idea: "Most people won't keep your ad in mind long enough to go online and visit your site after seeing a newspaper ad."

    You bet they will if what you are advertising is what they need, want or are looking for. You have to be specific in print. And for sure DISCOUNT offers work very well.

    Actually the best place to put up a 'print ad' is in the classified section of industry trade magazines. They are relatively inexpensive and very well focused. And since ALL readers of trade magazines are also 'consumers,' you would be surprised at the response to seemingly off target products.

    You can buy run of the network search traffic for ONE CENT. That is effectively $10/1,000 CPM ... The problem is that we talk about affiliates as if they are a separate category and not basically just another business and they are all PUBLISHERS, no matter what you call them. They publish websites.

    So as a publisher, if you can aggregate advertisers or sales that generate 2 cents
    per visitor, which is the same as $20/CPM, you can make good money and a survive
    most ups and downs in the business cycle.

    So, say you get 1,000 visitors per day from generic search, and you have just one banner ad paying you $1/CPM, you paid make $30/month which should cover your costs of having an online publishing business.

    If you spin 4 text ads and one leaderboard ad at $1/CPM at the same 1,000 visitors, you make $150 per month ... and there is no law says you can't make more by also selling something.

    What people fail to realize is that Google Adwords at the 5 cent minimum are really costing you $50/1,000 visitors. Obviously there is a difference between ad impressions and website traffic. But 1,000 impressions should generate a 1% to 2% CTR worst case.

    Once again, IF the object is to make a PROFIT, not just to make some revenue, you have to consider this situation. A well put together 300x250 banner ad should command $5 CPM. And running two of them side by side with pre-sell text top and bottom is a cash cow. Page design matters big time in selling stuff online.

    Merchants should create 300x250 banners that sell both the click to the product or service and the product or service. Picture, text, call to action, benefits.

    A 600x200 banner is a huge money maker if you do it write. It fits on one screen, allows for pre-sell content above and below the banner. And can be super targeted.

    Merchants should pay for having their ads published ... if they pay a commission on sales over and above that, it's a plus.

    Affiliates who provide FREE on the come traffic to merchants deserve to get ZIP. The pay me later garbage is not long term viable for the vast majority of people who want to play in the affiliate game.

  8. #8
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    You know the majority of your posts, while worded differently, are basically all the same concept. You're wanting to get paid for the click/traffic, instead of the sale. And it seems your landing pages are still the same, banners.

    Of course if you're the affiliate paying 1 cent or 1/10 of a cent for traffic and getting paid more than that, it's great. But merchants can buy that traffic from the same places you are, and since they're the merchant, they're going to have better landing pages.

  9. #9
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    First fo all it's a great topic,

    Secondly for any kind of startegies anyone may choose, I suggest never to get started whit one your budget doesn't allow a long stand. Even if what you offer is very captivating. Because, there is a study that says people most come across your announces up to 7 or 9 times before they get the initiative to check it out. Though, affiliate Markters may click on a banner the ffirst time they see it,if after few days or week they don't see your offer anymore,they will think you no longer exist.We'll come to a point where you've just waste money and time. For Merchant who will probably have bigger budget, I still think there is no reason to keep investing in something that does not give efficient return. What may work for some may not work for others,for this reason we have analytics software. But, lets highlight something here,
    What is good whit printed papers your offer could be seeing during years,if your offer is long term offer you better consider it.

  10. #10
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    "Because, there is a study that says people most come across your announces up to 7 or 9 times before they get the initiative to check it out."

    That's an old general marketing adage and true in certain aspects but affiliate marketing is more immediate because it's online and available now and depending on the targetting, they can be ready to go. Somebody might have their hand on their credit card, know what they want, just need to know where to get it, where you come in. Or somebody knows where they want to shop but are looking for a coupon, where you can come in. And so forth.

  11. #11
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    Sure and I highlighted that affiliate marketers do click on an offer they come across the first time. But do we click in all banners in every website we visite every day? I guess we don't. PPC Is also fair to be used for a newbie, What if we get many click and no sale.And I promise you that I agree whit you; Affiliate marketers need quit result,but better not where the risk over 95% of loosing money.

  12. #12
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    Trust ... You keep missing the point ... whether it's banners, text or coupon ads people click on it's the landing page that converts or does not.

    Sure if you get the traffic and someone needs to know where to go to buy what they want, then you will make the sale more or less.

    I have more pages than you have ever seen ... and some are just content with a CPM banner ... some are pure product sales pages with a link to the merchant selling the product and I have a large number of directory type pages based on niche or category.

    Sure merchants can buy traffic where I buy traffic. But for the most part they want me to do it, because then they do not have to pay for it, if they don't convert, co-op the traffic or just deny a sale was made.

    I have NO problem with HONEST merchants ... most of those online are NOT HONEST.
    Adsense on EBAY, if you are an EBAY affiliate, co-ops any traffic you send to them.

    I sell quite a few items every month ... less now than before ... but that is as much a function of the economy as not.

    If I can deliver traffic to a merchant ... why don't they want to pay for it, up front?
    Because then they can't cheat you out of it thru parasites, cookie stealing and the like and not have to pay for.

    If I am a publisher first, affiliate second. So why should I be treated any differently than the NY Times, Fox or any other media company. NO WAY any of these merchants
    get FREE traffic on these sites?

    There is only one reason why a merchant would do CPA ... they can get away with it.

    And affiliates make it possible, whether they make money or not. And some do make money ... but most do not.

    Since I am in business to make a profit ... If merchants want traffic, they can buy it or not ... For very few am I going to send them anyone on the come. I really do not care.

    From a marketing perspective, I think it is stupid for a merchant to pay an affiliate manager $1,000/month just for dealing with affiliates when they can get 1 million impressions for a product or sales banner. But hey if they want to pay fools to deal with fools, it's not my problem.

    You don't see AM's working 100% on the come ... and until you do, all their hype about CPA is just that hype. In CPA some make money - but making money is NOT the same as making a profit.

  13. #13
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    Just trying to bridge the net4biz/trust gap here, but I think there is room for publishers running cpm and cpa campaigns. I've got a newspaper right now that prefers to run cpm campaigns. But it has a little extra inventory right now, so I'm running a cpa campaign on it to fill the gaps. Since the cpa campaign probably won't bring in as much revenue as the cpm campaigns, the deal I've set up with them is to run the cpa campaign whenever they've got the inventory, but they can replace it with a cpm campaign if another advertiser comes in and is willing to pay more money. In that way they are acting more like broadcast media. A little cpa is still better than nothing for them.

  14. #14
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    There is such a huge difference in the quality of traffic. I would never pay up front for traffic. Not without a little test to see what the quality is. A million visitors who don't buy or even look around are worthless to me unless I can find a fool to pay a CPM rate for the impressions.
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    Coca Cola pays over $2 Billion a year just to have people see impressions of their logo and such ... people know they exist and the people at Coke will not let you forget.

    You are right about the idea of quality traffic ... but as long as it is a REAL PERSON clicking over from a text link, banner or whatever, the reason they did not buy, look around and such, is YOUR fault. When they got to their destination, YOU did not hook them with a offer they couldn't refuse, some compelling content or whatever.

    Obviously, gamers are going to be more interested in games than non-gamers, but how many games are bought by grandparents as gifts for their grandkids? And people might not want what you are offering now, they might want it tomorrow or whenever and the fact they visited your site is imprinted in their head ... so when they need it, want it or whatever, they are likely to check you out, IF they remember you exist.

    Now getting traffic from the SERPS is best for sure ... but if you do PPC you are paying up front for it ... the cost per click is a function of the total number of searches and just because you pay Google after the fact does not mean you will be getting any traffic at all.

    In fact, at 5 cent per click, you might as well not even do ADWORDS since you are not going to get enough traffic to make enough to make minimum wage.

    Yet 1 million impressions x 1% CTR is 10,000 visitors ... you sell 1% of those people you sold 100 items ... If your gross profit is $15, you make $500 profit on a thousand dollar investment ($1/CPM). 50% ROI.

    For example: I buy 100,000 PTC traffic for $100 every month ... These are real people who must spend 20 seconds plus on the page I advertise ... If I make $10 a day on average from sales, I make $300. That's a $200 profit. It takes about an hour to set up the page and buy the traffic ... which is the equivalent of making $200 per hour of effort. Sometimes I make more, and sometimes less, but it is pretty easy to make back the $100.

    And even if you do not make back the money, 100,000 people know you exist, you brand your website and worst case you can use it to TEST offers. Combine this traffic with SERP traffic and judicious PPC traffic and you can make some money.

    You all understand, I hope, that 100K per month in 'lookie-loos' is more 'readership' than 75% of the publications in the world get every month.

    Also, you don't command CPM or slot fees if you have chump change numbers of people visit you site.

  16. #16
    Full Member OICUAM2's Avatar
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    It isn't necessarily MY fault if traffic doesn't convert. Usually, it is the quality of traffic being bought. I know my pages convert when I buy from certain sources, but I get absolutely nothing from other sources that PROMISE they deliver real people.

    Some PPC engines even give you some good traffic up front and then deliver their crap traffic when you raise your budget and request more traffic. Heard someone at Affiliate Summit talking about how an account rep admitted they have different quality levels of traffic depending on how much people are willing to pay for it. You might get traffic from bucket A when you do your limited test, but then you get traffic from bucket B when you start to buy more traffic.
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  17. #17
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    Obviously you want to target your traffic but as you say, the quality level varies. And once you find a source that converts well, you go with it. The point really is there is only X amount of people who want to buy Y product on any given day.

    How many AF marketers and how many merchants would be in the game if they had to pay for 100% of their traffic?

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