Why the Engines Like It (Continued) CPA pricing also allows the engines to run ads as they see fit, where they see fit, to produce acquisitions. The engines can therefore better monetize ads that companies wouldn’t pay much for on any other basis. This could be because the ad space is low quality and no advertiser could pay little enough to justify the expenditure on a CPC basis. Perhaps the most significant reason the engines like it is that the CPA auction is efficient and it pushes advertisers to bid as much as they possibly can, very quickly. Advertisers won’t feel the need to cautiously inch up the auction, bidding a penny more here and a nickel more there until they reach their ROI tolerance. The advertiser can simply say, “I’ll pay up to $50 for an acquisition, get me as many as you can,” thereby cutting out all the games advertisers play in a CPC auction. Despite all these benefits, don’t expect the engines to start selling all of their ads on a CPA basis.

I recommend:  Learn more about Pay Per Click Advertising Management.

What to Do About It The CPA auction will rapidly force advertisers to take a good hard look at the factors that influence their ability to bid higher. These are site conversion rate and the amount of profit generated by each “action.” These are the same two basic factors that drive bid prices in a CPC auction, but advertisers will notice it much more quickly in a CPA auction. The amount of profit generated per action is a function of one’s business model. The conversion rate of your site, however, is something you can affect more quickly. Those advertisers with hefty conversion rates and high profits per sale will dominate the CPA auction. So, as a savvy CPA advertiser, you will need to heed the common advice of constantly testing to improve your campaign and your conversion rate. If you’re measuring actions on your website and you can assign a value to those actions, then you should probably be testing in the CPA auctions. If you can’t do those things, then call me.

I recommend:  Learn more about Search Engine Marketing.