CPC versus CPA
I have paid little attention to all the click fraud ruckus that has gone on the last few weeks. However, one little item got my attention. It has been suggested that search engines move from a CPC (cost per click) model to a CPA (cost per action) model.
What is CPC?
Adsense/Adwords is an example of CPC. Advertisers place an add on a search engine focusing on certain keyword phrases. Every time a user clicks on those ads, the advertiser is charged. The advertiser is not charged for simply displaying the ad.
Enter click fraud. Competitors/hackers/others click on ads for the sake of clicking on them without any interest in the product itself. Advertiser’s costs skyrocket with the multitude of clicks. While search engines have insisted controls are in place, many don’t think it is enough.
Enter Cost per Action. Cost per Action works similarly to CPC. However, the advertiser only pays for his ad IF the add converts. A conversion can be anything that the advertiser determines ahead of time: email newsletter signups, product purchase, etc.
Snap.com currently advocates CPA. See their CPA Explanation page for more details.
What is the catch with CPA?
The search engines will potentially know your websites conversion rates (all depends on the search engine). I know there are many that are uncomfortable about that. What do you think?
[tags]cpc, cpa, cost+per+click, cost+per+action[/tags]
Posted by Paul Flyer on Monday, August 14th, 2006 in Internet Marketing, Web Analytics
