Converting CPM to CPA
I was chatting to a sales lady at upmystreet today, now normally i wouldn’t want to name and shame, but this lady’s sales skills were tragic, no surprise when the head of display advertising at the agency i work at warned me she’d be useless.
basically there’s been a lot of noise about how CPM display advertising has come under fire particularly in this recession, with affiliate offering a significant threat, due to its model of paying only for actual sales.
Given that Upmysteet is a CPM business, there are ways that a CPM network can work on CPA, its as simple as understanding the various measurements CTR, and conversion rates, if you’ve got the number of impressions, and you know the CPM (both from the CPM network) and you know what the Conversion rate and commission is (both from the affiliate network), its a simple case to calculate what the likely CPA gains are, heres an example:
100000 impressions x 0.12% = 120 click; 120 clicks x 4% conv. = 4.8 sales x £5 commission = £24 in commission
given this equation is extremely simple, i was surprised at 1. how long it took me to explain this to the sales lady who clearly didn’t get it. and 2. i was awestruck at how much they were charging on CPM (£6!) at this CPM the same volume of traffic that converted equally as poorly would have cost a client a whopping £600! when (at least from an affiliate prespective) that traffic could be worth more than £24 due to the low click through rate.
I was totally appalled that despite the entire wasted conversation this lady was still adamant the quality of the traffic was worth £600 despite me pointing out that because of the above equation, that traffic was pretty much…worthless.
and whilst there will be those ‘brand monkeys’ out there who will argue its all about brand and brand presence, yes this might be the case but what is marketing about? Sales, increasing sales, so when you try to predict and forecast, you need to be able to do so as accurately as possible. Whilst we can’t measure whether a user has actually looked at an as whilst the are surfing a site, the next best measurement is how they respond to the ad, the click through rate, and given that up my street quoted me a CR of 0.12% i would personally say that was appealing, given i’ve seen CTRs around 5% and above in affiliate marketing for specific true conent affiliate sites.
Related posts:
Leave a Reply