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Net Gains: The Myths and Realities of CPC vs. CPA in Affiliate Marketing

20 Nov, 2010 By: Greg Bayer Response

To be successful, affiliate marketers need a comprehensive understanding of the myths and realities associated with both model types — cost-per-action (CPA) and cost-per-click (CPC). Both have unique benefits and drawbacks, so trying to compare the results of one method versus the other isn’t always straightforward.

Separating such myths from the reality is the first step to helping affiliate marketers maximize productivity and increase their profitability.

Myth: CPC is risky. CPA is safer.

The Reality: CPC payouts can increase or decrease depending on: a) quality of the referred click; and b) advertiser bid pressure. Although unpredictable at first, the more time spent within a category, the greater understanding there is around the different ranges to expect. The advantage here is that if quality is high, the competitive bid pricing by advertisers can offer an affiliate better upside than any other model. Affiliates also benefit from being able to leverage a single creative backed by many different advertisers thus avoiding unnecessary re-directs.

CPA can be very profitable for affiliates, particularly if they have a targeted audience that is receptive to their message. Having a strong brand name can be very appealing and compelling to consumers, but it can also be risky. While payment is constant for the specified action, it is often more challenging to persuade enough people to act than click. This can lead to over-dependence on the advertiser to ensure creative is enticing and that landing pages are highly customized to guarantee the desired action.

Myth: Branded CPA creative will always drive a better yield than a category-based CPC creative.

The Reality: The ability to get granular within a specific category and give it the right context can make a big difference. Which do you think would be more appealing to a consumer — a non-branded creative for the actual training course or one for a well-known establishment that may or may not feature the individual’s preferred course of study?

As an affiliate, you know your audience best and subsequently should determine which creative would generate the best response.

Myth: CPC or CPA? It has to be one or the other.

The Reality: In today’s dynamic and challenging environment, affiliates must use every available resource to achieve their ROI goals. CPA and CPC are effective on their own, but when used as complementary tools, they can transform an affiliate marketer’s business and profitability. As situations change, you must have the flexibility to utilize both, either in tandem or in separate campaigns.

Let’s take the example of a heavy-hitting, branded CPA offer supported with offline activities through TV, radio or print; these efforts in tandem are more likely to generate the necessary action due to the advertising buzz being generated. As the product category becomes even more established, a CPC campaign in that same sector would be the natural complement to an affiliate’s marketing plans.

An emerging trend now means affiliate marketers no longer have to choose between one or the other. A few key networks are starting to offer both CPA and CPC models, giving affiliates the flexibility and diversification they need to find the right fit for each scenario. With many advertisers’ media plans utilizing multiple options, this is particularly timely and valuable.

Affiliate marketers need to assess their campaign objectives, from clicks to sales, and have the knowledge and ability to deploy each of them selectively depending on the situation. In addition, when deciding which network to employ, affiliates should evaluate the expertise offered by account managers to ensure they are able to receive the right guidance and advice to achieve their individual goals. 

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