Online advertising gives more quantitative feedback than many other forms (you can count the clicks, even if you can’t truely say what CTR is “good” or “bad”). But advertisers want more accountability. And so clients move from cost per impression to cost per click, to cost per action (or acquisition). Basing advertising on cost per customer aquisition, which we’ll call CPA (although CPA can mean a number of things), means that the website effectively must trust the advertiser to do a good job of converting the traffic that is delivered into customers. If the advertiser does a bad job of conversion, the site running the advertising loses out.
Now this situation may be a good thing for an advertiser, but unsurprisingly is increasingly unpopular with media companies – try getting CPA deals with most of the electronics media! Maybe Google can achieve a successful CPA business, but they have far more advertisers than any electronics site – effectively a more liquid market. Although I’m sure CPA deals will be available from some sites in our industry, I personally believe that cost-per-impression is going to be the preferred approach – at least until the day that websites have a glut of impressions that they can’t sell. The IT industry has offered a range of cost per action deals (and still does – we’re working on a great pay-per-lead programme for one of our IT customers), but the industry is beginning to kick back, and in one of the first posts on PC Pro’s blog (yes they really have only just started a blog!), there is a strong defence of their decision to stop offering CPA ads. After reading it, I almost felt sorry for online media owners!