Internet Advertising Article on CPA versus CPM/CPC

see the full article also by clicking on the link of the title:
Metrics Insider: CPA: Trend Or Permanent Move? by David L. Smith , Tuesday, October 21, 2008

THERE IS, ONCE AGAIN, AN increase in the market of CPA deals. This generally happens in a down market, when less inventory can be sold on a CPM basis due to market weakness. Mark Kvamme of Sequoia opined at a AAAAs management lunch in San Francisco last week that CPA would be THE sales metric of the future. (Sequoia is an investor in AdBrite which, according to Kvamme, is selling more and more CPA activity).We don't agree that CPA will be the only sales metric of the future.

There are two reasons for this: First, we can sometimes make better deals with CPM-based buys and second, sites cannot see the full picture from a metrics standpoint and CPA represents only a single dimension.Better Deals With CPM Buys?An astute buyer knows how to take a CPA buy and reverse-engineer it into a CPM buy based on acquisition rates and "allowables." We've always contended that with great creative and an aggressive buying stance, we can beat many CPA buys through CPM negotiations.

There are, of course, exceptions. But CPM deals give the buyer more control via contextual, behavioral and relevancy targeting -- and if one can do so and reach or beat the CPA offered (or CPW, as we like to call it -- cost per whatever a client is measuring), then that's great.CPA Only a Single Dimension?The seller does not have access to an agencies' 3PAS (third party ad server) data. They cannot see view-through, are dependent on 3PAS functions like Atlas' Universal Action Tag to dedupe between networks (we don't think it is a good idea to let networks put their tags up on our client sites without the UAT controls), and cannot see the overall value of other actions besides the end CPW that we'd do a CPA deal on.

The CPA deal might be done on a sale, but we might also value pages viewed, time spent on a site, downloads, requests for information or registration and other client engagement. Lastly, they cannot see the information the buyer sees relative to overall attribution management. The reality is that buyers will increasingly use attribution management tools to adjust the actual CPW to a virtual CPW based on consumer engagement with other elements of the buy before their transaction. We're open to either technique. But we feel that CPM as a sales metrics will survive, although it will have to weather a big storm in the current downturn.

Post your response to the public Metrics Insider blog.See what others are saying on the Metrics Insider blog. David L. Smith is CEO and founder of Mediasmith Inc. -- a full service advertising media agency, specializing in digital media with an increasing emphasis on emerging technologies. Mediasmith is headquartered in San Francisco.[Photo]Metrics Insider for Tuesday, October 21, 2008:http://blogs.mediapost.com/metrics_insider/?p=104[Photo]You are receiving this newsletter as part of your membership with MediaPost.[Photo]We welcome and appreciate forwarding of our newsletters in their entirety or in part with proper attribution. (c) 2008 MediaPost Communications, 1140 Broadway, 4th Floor, New York, NY 10001 [Photo]