When approaching mobile advertising and the different ad networks that there are on the market, mobile-advetising-cpc-cpm-cpaone always wonders which method of reconciling ad delivery we should choose – CPM or CPC? Most ad networks offer both options, and there must be a reason for that, but have any of them ever thought about CPA?
Let´s start by looking at what these terms mean:

CPM = Cost Per Mille

In Latin mille means thousand, so CPM is Cost Per Thousand and usually refers to ad impressions – the number of times an advertisement loads onto a user’s screen.

The ad network´s job is to plan the distribution of ads according to the advertiser’s campaign goals. With CPM this is a simple, risk free task for the ad network – the advertiser provides all the creative work which the ad network simply displays across sites on their publisher network. Note that in this model the advertisers pay for impressions, not for clicks or their resulting actions, so as long as the ad is served the ad network gets paid.

Larger mobile advertising networks such as Yahoo! use this model and big brands seem to like it as it provides both brand awareness across top publisher’s sites, in addition to users clicking on their ads. But there are questions about how advertisers accurately and independently measure the success of their CPM campaigns.

CPC = Cost Per Click

This is where ad networks only charges the advertiser when their ad is clicked. This means that each ad network has to make sure they place ads on sites relevant to the advertiser and their campaign – because no clicks means no money! This usually results in the ad networks charging more for each click than they would for each impression, given fewer people will click on each ad displayed. Since the advertiser is paying more for each click it becomes more important for them to produce a compelling message and a relevant offer behind that message. They need to turn those clicks into actions, since lots of clicks but no actions is not a good result.

This model is what has made Google lots of money and it is normally easy to set-up and is self-managed for advertisers. To measure success, advertisers would count clicks and calculate conversion rates. The result would give you the Cost-Per-Action or Cost-Per-Acquisition.

CPA = Cost Per Acquisition

This is where the Ad Network only gets paid for campaigns that generate a measurable ROI for the advertiser. Naturally the advertiser pays significantly more per acquisition, but only when a click converts into the campaign’s desired action. Sounds like a pretty good deal to me, but its success does depend on the ad networks ability to effectively measure actions.

CPA is currently still in its infancy on mobile, which may sound strange given the extra level of information that mobile provides. Mobile can deliver contextual, targeted messages with location, carrier profile and exact time of interaction, being accurately recorded. Mobile can measure the quality and duration of engagement, and give you depth of information that other media can’t.

The crucial thing, whichever model you chose for your mobile advertising, is to use a good quality, independent mobile analytics tool. It is the only way to get detailed and accurate information about mobile visitors interacting with your ad campaigns across all ad networks. Not only on one ad interaction but across multiple campaigns over time – it is the only way to see the true value of your mobile advertising investment.

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3 Comments

By Steven Shields on May 24, 2010

Hi – we run large CPC campaigns across a variety of ad networks on a D2C basis (in addition to our International B2B Mobile Affiliate Program), so I read your article with interest. I have been seeking an advertising channel offering a CPA model for what seems like forever, and your post seemed to indicate that you knew of one?

You mention that the CPA model is ‘still in its infancy’ but who, I wonder, is nursing it along? Do tell!

I am willing to offer large incentives to any advertising channel wishing to experiment in this area – even to the extent of paying them up to 90% of the resulting revenue. And since our services are among the highest converting mobile content sites in the world, who better to test the market with?

Any information you can share regarding alternatives to the dominant CPC/CPM models would be gratefully received.

Regards,

Steve Shields, Director
Katina Leisure Ltd
http://www.katinaleisure.com

steve@katinaleisure.com

By admin on May 25, 2010

Hello Steve,

Companies like Greystripe, Clickbooth or Mobpartner are doing it. You are right though, there are not many we know of. If any readers know about more Ad Networks that work with CPA, please send us your comments!

Thanks for stopping by!

By Mike on May 26, 2010

Hi all
As you dive into leads based campaigns on mobile you’ll start to understand that not many businesses offer CPA owing to the difficulties around tracking. For example many handsets do not allow for cookies and if they do many carriers across the world increasingly strip cookies at their respective network gateways, so cookie based tracking is not ubiquitously possible. So in this example you see that traditional performance measurement has challenges. There are solutions out there though. At this stage many of these solutions are costly or simply don’t meet complete requirements of publishers/affiliates. Once someone works out this golden nugget they’re in for happy days. Oh, and before someone responds with ‘yes we have a solution’, I don’t consider Click per call, fully hosted solutions, media stamps, etc, as fully acceptable solutions. Don’t get me wrong they are good solutions, but not solutions that solve all the issues facing the roll out of a traditional performance based ad networks on mobile. cheers

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