CPA or CPC

Since Channel Intelligence allows retailers to participate in our ad network (CIAN) under both CPC (cost per click) and CPA (cost per action) payment options, we regularly receive questions from our retail partners why anyone would choose the relatively risky CPC option when the CPA option is available.  The answer is that some sophisticated partners can manage CPC listings in a way that allows them to achieve a higher ROI under CPC than CPA.   Whether considering CPC for CIAN or any other advertizing placement, here are some key considerations that should drive your decision:

·         Nature of publisher’s traffic – Some web surfers are shopping and others are just browsing.  Shoppers are more likely to interact with commerce-focused sites like comparison shopping engines and product manufacturers and as a result these sites tend to drive the highest converting traffic to retailers.  Non-commerce focused content sites tend to have lower conversion as you are more likely to catch the eye of browsers.  Confining your CPC to commerce sites helps maximize the ROI of these investments.

·         Organizational capability – Is your business able to identify and remove poorly performing products quickly?  If not, choosing a CPC option will be risky for you.

·         Product strategy – Because CPA locks in a specific ROI, if you want to drive traffic to as broad a set of products as possible, you are best sticking to CPA.  If you are content to focus on a small set of high-return products, CPC becomes a valuable option.

·         Average order value – ROI is a pretty simple equation.  The higher the selling price of your products, the more click cost you can support for a given ROI.  As a result, advertisers usually have better luck paying CPC for large ticket consumer electronics products than they do supporting the accessories that go with them.  Understanding your average selling price on a publisher will help guide your preference. 

·         Trust in partner – In most cases, the publishing partner will report clicks.  Do you trust them to report accurately and remove clicks it knows to be fraudulent?  If not, stick to CPA.

·         Publisher’s Implementation details – Publishers that display price and availability help improve conversion by reducing exploratory clicks.  At CIAN, we always recommend that our manufacturing partners display these elements in order to improve retailer conversion rates and, equally importantly, improve the end customer experience.   Understanding how and where your product links will be displayed will affect which option a retailer should choose.