Forget clicks, page views, and impressions; the only way to effectively track your online marketing ROI is through Cost-per-Action (CPA) analysis.
As the online advertising market is poised to grow nearly $10 billion over the next six years, it's essential that we remember the importance of measuring the effectiveness of that spending. There's no point undertaking any marketing or advertising campaign unless you can measure its results. And results are best measured in terms of return on investment (ROI).
Unfortunately, in the world of marketing and advertising, many businesses seem to be losing touch with their general objectives. The tools may have changed, but the principles remain the same ? Your advertising campaigns are only successful if they meet the objectives you set out to achieve. So if you're after increased sales, you need to measure the cost of each sale generated to determine your return on investment.
Fortunately for advertisers, tracking ROI for online advertising is much easier than it is for traditional forms of advertising, such as TV, Radio, Newspaper, Magazine, and Billboard. When you market online, every advertising campaign can be tracked and measured all the way down to the penny. This is why more and more advertising dollars are being spent online every day.
Why Not Cost-Per-Click or Cost-Per-Impression?
When it comes to tracking campaign effectiveness, many businesses rely on Cost-per-Click (CPC) and Cost-per-Impression (CPM) statistics. But what many people forget is that for most businesses, clicks and impressions don't earn you money. So by tracking clicks and impressions, you're not really tracking return on investment. The same is true of page stats.
If you're like most businesses, impressions, clicks, and page views are simply a means to an end. (In fact, without corresponding sales conversions, they're nothing more than unjustifiable expenses.) If you only earn revenue from sales, you need statistics linking costs and sales. In other words, you need to measure cost-per-action (CPA).
Cost-Per-Action (CPA)
In a CPA campaign, you run an online ad on third party sites and they charge a commission when a lead is generated or converted. It's performance-based pricing. This means the publisher wears most of the advertising risk, as their commissions are dependent on good conversion rates.
Perhaps the most widespread use of CPA is affiliate marketing. With affiliate marketing, you determine what actions you will reward and how much you're willing to pay per action. For example, you might engage an affiliate site to promote your business. If they generate sales for your business, you can pay them a commission. Your cost-per-action would then be the cost per sale or lead generated.
Tips on Conversion
The following conversion tips will help you plan your CPA campaign and avoid some common pitfalls.
1) How are sales and leads recorded?
For many businesses, the obvious result which constitutes a conversion is a sale. If your sale is recorded or registered online (e.g. e-commerce), it can be considered a measurable action. This means you can choose a sale as the desired action in your CPA campaign.
Depending on the aim of your campaign, you may want to measure other outcomes in addition to, or instead of, sales. For instance, you might measure leads in the form of membership registrations, newsletter subscriptions, software downloads, or just about any other activity beyond simple page browsing. So when your customer clicks register, or subscribe, or download, etc., the conversion is automatically registered and the details are fed back you're your CPA campaign.
In either case, at any time, you can log in and view your campaign results in real time.
2) Set up a landing page to capture lead contact details
If you're paying for leads, you obviously need to know when a lead is actually generated. Generally a lead becomes a lead only when the customer supplies you with their details (name, contact numbers, email, etc.). This means you need to set up a landing page on your site capture these details. Your capture page can be collect contact information or it can be as simple as a signup for a monthly newsletter.
3) Get your CPA provider to set up your landing page
If you don't have the time, inclination, or resources to set up the necessary forms and database on your own site, the CPA provider can do it on their hosted server. They collect the leads and calculate the statistics. For many businesses, this is the ideal option because it saves them time and money, and there are no tracking discrepancies.
4) Find a CPA provider you can trust
If your CPA provider will be collecting leads and calculating statistics, you need to know you can trust them. There are plenty of trustworthy providers out there; you just need to find them. A trustworthy provider will find out what your exact needs are and spend time researching your niche market online. By performing this marketing analysis, your provider will be able to tell you exactly how much business they can bring you on a daily, weekly, or monthly basis. If they can't provide you with this important information, then this is a good indication that you are not speaking with a professional internet marketer.
Just as importantly, with a trustworthy provider you'll be able to personally speak with the internet marketer who will be working on your project. This person will be an expert in the field of internet marketing, not just a sales rep.
5) Avoiding excess fees
WARNING: Some CPA providers charge a setup fee ($2,500 to $10,000) and/or a network fee (20% to 30%) for each sale or lead that is generated. Before committing to a provider demanding high fees, make sure you are getting more for your money. Most of the time high fees simply mean the sales rep is getting a higher commission!
6) Measuring your conversion rate
The Formula for measuring CPA is by dividing the total cost per advertising campaign by the total number of actions (conversions) that were received from each ad campaign. For example, if your online ad campaign costs $1,000 and generates 50 sales or leads, your cost per action (CPA) is $20.00 each.
7) Improving your conversion rate
A high conversion rate depends on several factors:
Because CPA allows you to identify exactly how much it will cost to acquire a customer, there's no guesswork involved. You have the ability to precisely calculate your ROI. And because online tools and ad serving technologies allow you to monitor effectiveness in real time, you can even tweak campaigns while they're still running. If you can master effective online advertising, you'll not only save thousands in implementation costs, you'll also reap the rewards of a far higher return on investment.
About The Author
Rick Crosby is CEO of a full-service internet marketing and online advertising agency, MarketingWebTraffic.com. Visit http://www.marketingwebtraffic.com for further details or contact Rick directly at 727-490-5739 or email mailto:rick@marketingwebtraffic.com.
Building a website is easy. Building a successful e-business is... Read More
Have you ever been horrified and intimidated at the convoluted,... Read More
Are you interested in making your online sales soar like... Read More
Google is at least as interested as you are in... Read More
When it comes to making money online, there are a... Read More
It may not rank as a killer like heart disease... Read More
Although many Internet marketers spend thousands of dollars on Internet... Read More
OK, so you're making some sales, either of your own... Read More
One of the best projects to undertake as an online... Read More
To market successfully you must incorporate the Internet into your... Read More
You may have heard the expression that "content is king".Yes,... Read More
After years of gut wrenching work and stress the home... Read More
Yes, I admit it - I hate asking for referrals... Read More
If you've been utilizing the Internet for any length of... Read More
"The Internet Gold Rush is under way" Bill Gates, chairman... Read More
When you start your online business, you will go through... Read More
1. Design your web site to be a targeted resource... Read More
Google has released another valuable. The tool, "Sitemaps", allows you... Read More
1. Most people like surprises because it's a change of... Read More
There are certain mesmerizing words that when used effectively can... Read More
Are you Paris Hilton? Is your name instantly recognizable when... Read More
If you're looking for Internet marketing help you've come to... Read More
I hate reciprocal linking.It is such a hassle. Even specialized... Read More
This wasn't meant to sound like one of those "rags... Read More
Among the variety of techniques available to you as a... Read More
Online advertising has changed over the years. Some believe the... Read More
I've had numerous conversations with web entrepreneurs about this topic... Read More
There are over 200 million people worldwide connected to the... Read More
OK, you've been bustin' your butt trying to make money... Read More
#1 ~Look at your past customers~Notice trends in the type... Read More
If you haven't already heard the buzz, Michael Port is... Read More
If you haven't heard the word 'niche' being batted around... Read More
I started as an internet marketer, like I am sure... Read More
Internet marketing, a lot of the time really is hit... Read More
I recently noticed that my friend's two-year-old, Conor, is getting... Read More
Remember those Super Bowl and World Cup commercials where you... Read More
If you've been utilizing the Internet for any length of... Read More
A successful online business takes more than a website?a lot... Read More
When I first started my internet home business, I realized... Read More
Simply put, online testing involves keying each different test variable... Read More
What is the secret of being the best at Internet... Read More
Pay Per Call is the next wave of advertising on... Read More
Would you like to accelerate profits at your website?Here are... Read More
Are you considering launching an eCommerce website? If you are,... Read More
Perhaps the online community today is not so different from... Read More
Generating buzz through word of mouth will help drive greater... Read More
So you're starting a website and have visions of making... Read More
You've probably know many answers to this question: a good... Read More
Did you know that there are seven psychological techniques that... Read More
Many people say that it is easy to write a... Read More
Internet Marketing |