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  1. #1
    lurk
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    The Future of CPA...
    What does everyone feel as to what will happen with CPA? It's been an ongoing debate in the industry weather it will die soon or weather it will replace many CPM deals.

    What are you thoughts on this?
    Jason

  2. #2
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    I don't see any spectacular changes on the horizon. Each model has its place, IMO.

  3. #3
    ABW Ambassador
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    Merchants love CPA. Nothing will change.

  4. #4
    Member SuccessPoint's Avatar
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    Merchants love CPA. Nothing will change.
    True, merchants love CPA. It's a total win-win situation for them.

    It's the affiliates that are getting feed up with all the CPA issues. I sure hope something changes.

    -SP

  5. #5
    CPA Network Rep JP Sauve's Avatar
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    Yes merchants love CPA, but don't forget that many affiliates do as well.

    There is no unfortunately no advertising model where the risk is split 50/50.
    [font=verdana][b][size=3][color=red]Are you familiar with [URL]MaxBounty.com[/URL] yet?[/color][/b][/size][/font][font=verdana][b][size=1][color=black]
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  6. #6
    Member Azam's Avatar
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    Most serious affiliates I know don't like CPA. Almost all the huge sites prefer CPM, CPC or other methods of revenue generation to CPA.

    Yes, you are right, merchants love CPA. But that's because it's generally highly biased in their favor.

  7. #7
    CPA Network Rep JP Sauve's Avatar
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    Quote Originally Posted by Azam.com
    Most serious affiliates I know don't like CPA...
    Take all the networks that work on CPA.... CJ, SAS, CPAEmpire, Azoogle, AffFuel and even our humble little network MaxBounty.com. Combined they all generate many millions of dollars per month in payouts on a CPA basis to affiliates. I'd guess the total number would be at least a million dollars a day in affiliate earnings, as don't forget that some CPA affiliates earn well over $100K per month with a single network alone...

    ...I would think those are serious numbers from serious affiliates.
    [font=verdana][b][size=3][color=red]Are you familiar with [URL]MaxBounty.com[/URL] yet?[/color][/b][/size][/font][font=verdana][b][size=1][color=black]
    • Over 120 merchants with CPA/CPS programs seeking affiliates
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  8. #8
    lurk
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    Quote Originally Posted by JP Sauve
    Take all the networks that work on CPA.... CJ, SAS, CPAEmpire, Azoogle, AffFuel and even our humble little network MaxBounty.com. Combined they all generate many millions of dollars per month in payouts on a CPA basis to affiliates. I'd guess the total number would be at least a million dollars a day in affiliate earnings, as don't forget that some CPA affiliates earn well over $100K per month with a single network alone...

    ...I would think those are serious numbers from serious affiliates.

    100k/month mmmm... I could go for some of that.
    Jason

  9. #9
    Member Azam's Avatar
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    How much output results from labor does not have any correlation with satisfaction. The prisoners in Nazi concentration camps could dig more land in a day than the average teenager in the West can now do in a week, but it didn't mean they were happy with their situation.

    The fact that millions of dollars are generated via CPA doesn't mean affiliates think that method of paying for advertising is perfect for them.

    Correct me if I'm wrong, but I reckon that most webmasters would generally prefer to accept advertising on a CPM or CPC basis rather than CPA. Witness the success of Adsense and the months of speculation on WebmasterWorld about when Yahoo's contextual advertising program will start up. I don't see webmasters salivating at the prospect of another CPA network launching.

    I'm not claiming CPA does not serve a need and there are some fantastic and fair-paying CPA affiliate programs out there; all I was saying was that the likes of MSN and Yahoo prefer to accept advertising on a CPC, CPM or sponsorship basis, and so do most of my friends in the industry. When their traffic reaches a point that they can start attracting advertising on a basis other than CPA they jump at the prospect.

  10. #10
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    How on earth can a single affiliate earn $100k per month? Do they earn that amount regularly or is it just an urban myth?

  11. #11
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by Azam.com
    How much output results from labor does not have any correlation with satisfaction. The prisoners in Nazi concentration camps could dig more land in a day than the average teenager in the West can now do in a week, but it didn't mean they were happy with their situation.

    The fact that millions of dollars are generated via CPA doesn't mean affiliates think that method of paying for advertising is perfect for them.
    Your analogy is broken. Prisoners had choice removed, affiliates do not - so the output reflects that many affiliates have made a choice to invest their time and money in CPA.

  12. #12
    notary sojac Herb ΤΏΤ¬'s Avatar
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    Cool
    Every time a site visitor sees a banner or follows selling copy, we have provided exposure for a merchant. True, it is difficult to measure the value, but I feel hybrid deals that include a little something extra to reflect this are much more equitable than straight CPA.

    Yes, a little more because of the risk, too.

  13. #13
    CPA Network Rep JP Sauve's Avatar
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    Yes, I'll agree that hybrid WOULD be a nice solution... except it's unfortunately not a solution that works in most cases. There's FAR MORE websites with poor unconverting traffic than otherwise.

    I've heard the argument many times before... if a webmaster places a CPA ad on his website, sends it thousands of ad impressions, and no leads are generated, that affiliate might blame the merchant. However put yourself in the merchant's position. Why would this advertiser pay the same affiliate for those same useless ad impressions on CPM (or even on hybrid) if they didn't generate a sale/lead?

    Before you say BECAUSE IT'S BRAND ADVERTISING (and this is a very generalized statement) know that web advertising is not a great means to advertise a brand.

    You see McDonalds ads on TV enough, and you want to eat McFood no matter how crappy the product is. That's the power of brand advertising. The same does not apply online. The Net is a horrible means of brand advertising as the surfer isn't captured. You put an ad on TV during Survivor and most people who are watching Survivor will see the ad. Put an ad on radio, and most people listening to a station will listen through the ad and wait for the next song. The ads get seen and heard because the users are a capture audience. That's not the case online where the surfer doesn't have to look at the ad, and even if the ad is in a good spot, they have the option of viewing around or away from it, or even having multiple browser windows open.

    The vast majority of online ads (even CPM ads) are not to directly to build a brand, but to obtain an action. Even what you might think of as brand advertising isn't so. Ford buys CPM banner ads. The banner ads aren't effective in elevating the Ford brand, so their banners are not brand advertising. However if the surfer clicks on the ad... the Ford WEBSITE does well to brand them as the surfer is being exposed to Ford. What action Ford wants is not eyeballs on their ad, but on their site.

    So why do advertisers buy on CPM? A website with good relevant traffic is a commodity, and can demand better pricing which guaratees them their income. From the network's point of view however, almost all CPM buys have to back out into some sort of metric which is on CPA.

    If Ford decides that each visitor to their website is worth $10 in brand advertising to them, they equate their click through rate vs ad impressions and market the campaign through the networks on a CPM basis. They know X surfers will click on the ads from Y impressions, so they market the campaign at 25 cents CPM. And I know for a fact that it certainly goes even farther than that, where the network is only paid on a CPA rate, but markets it affiliates on CPM as that's the model of choice of website owners.

    This is getting to be a long post, and I hope you all find it informative, but I'll add one last thing. The reason why I think CPA is a far better model FOR AFFILIATES than CPA is this.... My example above Ford will pay either 25 cents CPM or $10 per visitor. If you have at least normal surfer traffic (and especially if you have niche traffic), which would you choose?
    [font=verdana][b][size=3][color=red]Are you familiar with [URL]MaxBounty.com[/URL] yet?[/color][/b][/size][/font][font=verdana][b][size=1][color=black]
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  14. #14
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    Thanks JP Sauve, It was very informative for a newbie like me

    One question/comment..
    The reason why I think CPA is a far better model FOR AFFILIATES than CPA is this
    Did you mean CPM ??

    Kend

  15. #15
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    JP your online advertising critic is correct and informative. The one void you missed was why a Hybred deal, in some cases, is a necessity for the real pre-sell value-add affiliate.

    you said: "I've heard the argument many times before... if a webmaster places a CPA ad on his website, sends it thousands of ad impressions, and no leads are generated, that affiliate might blame the merchant. However put yourself in the merchant's position. Why would this advertiser pay the same affiliate for those same useless ad impressions on CPM (or even on hybrid) if they didn't generate a sale/lead?"

    Here goes the real facts on Value-add affiliates, with pre-sell showcases for merchant products or services, and not some revolving door SERP trick. I build a few showcase pages, carefully placed on complimentary sites, to hawk traffic directly to my ecommerce enabled merchant clients. Those static pages year after year out perform all other advertising links on conversion ratio for every merchant....period. Why?

    Simple there's no white noise, cookie trickery, reporting snafus, tricks for clicks, between those pages and the merchant's landing page. The white noise Pitfalls, tracking snafus and outsider cookie landmines imposed upon the very targeted traffic coming from EcomCity clicks guarantees only 10% of the actual influenced sales get credited to me. If the networks, competing merchants and fellow affiliates kept their bloody hands off my referred traffic, allowing me to target-qualify and direct shoppers to a merchants page I'd have a phenominal conversion ratio.

    Those individual showcase merchant promo pages I carefully plant for every IMS merchant convert better then any paid advertising campaigns. They're much more then receprocal links. They're pre-sell meaningful natural SERP pages with no outside interference between click and merchant.

    So smart advertisers had better factor in a Per click or CPM bonus to go with a CPA deal for any and all true value-add affiliates. There not very many of them in the affiliate world and they're very easy for AM's to spot.
    Webmaster's... Mike and Charlie

    "What have you done today to put real value into a referral click...from a shoppers viewpoint!"

  16. #16
    CPA Network Rep JP Sauve's Avatar
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    Quote Originally Posted by Kend
    Thanks JP Sauve, It was very informative for a newbie like me

    One question/comment..


    Did you mean CPM ??

    Kend

    Nope. In my opinion CPA is better for any affiliate with at least average traffic. Here's why....

    Remember most CPM campaigns need to back out to a fixed CPA price for the merchant. To make it simple, let's take Ford again as an example. Ford pays the Network $10 per visitor to their site, but the idea is for the Network to broker the campaign to affiliates on CPM because affiliates like CPM. So what they pay on CPM is really a blended CPA rate. The publisher doesn't know anything about the cpa rates because he's getting paid on and seeing stats in CPM.

    - Affiliate #1 sends 10K impressions and generates no actions for Ford.
    - Affiliate #2 sends the same 10K impressions and generates 1 action.
    - The network is paid $10 for that action.
    - $10 divided by 20K total impressions is $0.50 CPM.
    - Affiliate #1 earns $5 for his traffic that generated no actions
    - Affiliate #2 earns $5 for his traffic that generated the only action.

    Affiliate #1 has useless traffic and is getting paid for it because affiliate #2 generated a sale. Affiliate #2 would have been better off getting paid on CPA where he could have claimed that whole $10 himself.

    That's a very simple example, and there are of course some exceptions, but the logic is there. Publishers with low surfer-value impressions getting paid on CPM will water down the earnings of publishers with normal or good traffic.

    So you the publisher need to ask yourself if your website is the kind that generates actions or not? If YES, you're better off going with CPA as the CPM earnings you're getting are being reduced by celebrity sites, Hot or Not sites, etc, running the same network CPM banners that you are. They don't generate actions. You do. But everyone gets paid the blended rate.

    Yes hybrid is better than CPM, but the problem of low quality sites mooching off your leads is still there, just to a lesser extent.

    It's so tempting to be lured into CPM as it's easy guaranteed revenue for publishers, but you should at least test the waters with CPA a little and see if you're a moocher, or action generator.
    [font=verdana][b][size=3][color=red]Are you familiar with [URL]MaxBounty.com[/URL] yet?[/color][/b][/size][/font][font=verdana][b][size=1][color=black]
    • Over 120 merchants with CPA/CPS programs seeking affiliates
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  17. #17
    Moderator MichaelColey's Avatar
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    JP is right on target there. That's why we're all in affiliate marketing. We want to get paid for results and we think we can produce above-average results.
    Michael Coley
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    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  18. #18
    lurk
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    That is a great perspective on this JP... here is a good article I read a couple days ago that explains what JP was mentioning about networks masking CPA deals on at CPM basis. http://www.adbumb.com/archives/2005/...g_cpa_on_1.php

    JP, based off your example, if the network pays affiliate 1 $5 even though it did not generate an action, and the network is only paid per action, does that mean that money comes out of the networks pocket? Also, being an employee of a network, does that issue happen often? I can't image it would be a huge issue, other wise that model would fail.
    Jason

  19. #19
    CPA Network Rep JP Sauve's Avatar
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    Quote Originally Posted by jrod805
    JP, based off your example, if the network pays affiliate 1 $5 even though it did not generate an action, and the network is only paid per action, does that mean that money comes out of the networks pocket?
    No, the end merchant is paying $10 per action, and between the 2 affiliates only one action was generated. So the merchant pays that $10 for the one action to network, and the network splits it between affiliates... even though rightfully one affiliate didn't really earn it and the other did.


    Quote Originally Posted by jrod805
    Also, being an employee of a network, does that issue happen often? I can't image it would be a huge issue, other wise that model would fail.
    Well MaxBounty.com is a CPA network, not CPM... so it's a completely different beast.
    [font=verdana][b][size=3][color=red]Are you familiar with [URL]MaxBounty.com[/URL] yet?[/color][/b][/size][/font][font=verdana][b][size=1][color=black]
    • Over 120 merchants with CPA/CPS programs seeking affiliates
    • Over 4500 network publishers seeking programs to advertise
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  20. #20
    lurk
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    Quote Originally Posted by JP Sauve
    No, the end merchant is paying $10 per action, and between the 2 affiliates only one action was generated. So the merchant pays that $10 for the one action to network, and the network splits it between affiliates... even though rightfully one affiliate didn't really earn it and the other did.

    So if both affiliates start perfoming well... the merchant is paid more and the affiliates are still paid the CPM rate they agreed on from the beginning?
    Jason

  21. #21
    Moderator MichaelColey's Avatar
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    The thing is, if a merchant is forced to pay a CPC or CPM rate, they will pay a CPC or CPM rate that will accomodate the lowest performer. Average and above average performers will be undercompensated.

    This isn't as simple as JP's example, but is probably more accurate:

    Assume a merchant would be willing to pay a $10 commission on an action and they see a 5% conversion ratio on their typical traffic. In theory, they could pay $0.50 CPC. In practice, they would lose their shirts doing that. Take the following affiliates as an example:

    Affiliate 1: 37 clicks, no sales
    Affiliate 2: 832 clicks, 71 sales
    Affiliate 3: 65 clicks, 13 sales
    Affiliate 4: 7,123 clicks, 14 sales
    Affiliate 5: 103 clicks, 2 sales

    Total: 8160 clicks, 100 sales

    If they were paying $0.05 per click, they paid $408 for the traffic. The worst performer (affiliate 4) was paid $356.15 for sales that were only worth $140 to the merchant. The best performer (affiliate 2) was paid $41.60 for sales that were worth $710 to the merchant.

    Now, it gets even worse. Affiliate 2 finds a merchant willing to pay $10 per sale and switch all their links out. With that affiliate gone, the totals the next month are:

    Total: 7328 clicks, 29 sales

    Now, the merchant is paying $366.40 for sales that are only worth $290 to him. To compensate, he now lowers his CPC rate to $0.03.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  22. #22
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    Hi

    We provide the technology and support behind a hybrid cpc / cpa arrangment which is called Connectshare - this can be accessed through our network interface by selected affiliates.

    In its simplest form retailers who have common products with a theme like a big movie release are pulled together into a template .

    Any cookied click through any of the links on the template gain the affiliate a cpc and any sales resulting from the users going through the links is also paid for on a CPA commission basis so you get two bites at the cherry.

    Its still in its early stages but already proving to be good business for the merchants involved whilst leveraging some of that branding budget from the likes of Disney and Buena Vista et al.

    A link to the latest Connectshare campaign is on A4u

    http://www.a4uforum.co.uk/showthread.php?t=33205

    I am sure this would go down well in the US also so maybe when we come across I will ask the others involved if they will bring it across as well.

    Mal

    Malcolm Cowley
    malcolm.cowley@perfiliate.com
    +44(0)191 241 6500
    The buy.at affiliate network
    www.buy.at

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