I’m going to have to agree with Andrew Goode’s article on “Hundreds of millions of online ads are “worthless,” posted on 17th May 2013.
What surprises me most about marketers’ spending behavior is that they are almost unknowingly wasting their budgets away on meaningless clicks and impressions.
I’m not saying that paying for clicks (CPC) or impressions (CPM) are a waste of time, but I would say that marketers need to understand if these campaigns are actually going to help them achieve their key performance indicators (KPIs).
I’m going to only use two basic online advertising KPIs as points of discussion on suitability of CPC & CPM campaigns. (1) Creating brand awareness (2) Driving online sales.
Now if you owned a company that sells real estate properties or cars for example, your main purpose would be to create attention, interest, desire and demand from the internet audience. In this scenario, your performance indicators would be in the number of clicks and views of your ads, so CPC & CPM campaigns are the likely solution for you. The choice of agency or vendors is most crucial here as you would need to verify the quality of publishers and understand the measures these vendors take to ensure that they don’t open the floodgates to any “Joe Bloggs”. Additionally, you can practice preventive measures such as using content verification tools where you can block or receive reports, in real time, the serving of your advertisement onto destinations that have been defined as inappropriate to your campaign. When you’ve ticked these boxes, I’d say your clicks and impressions costs are possibly worth your while.
However, if you owned an ecommerce business and your main purpose is purely to increase customer leads or sales, you actually have the benefit of tangible tracking of your returns of investment. Now I’d say I’m a believer of Cost-Per-Acquisition (CPA) campaigns, and I believe that this is what would work for you. Here’s why:
Benefits of CPA Campaigns - Positive ROI ALWAYS
Within the CPA model, you only pay the publisher when you’ve acquired a lead or a sale referral. No acquisition, no cost. We’re talking about 100% risk free advertising especially when costs only occur for validated leads or sales.
Problem with CPC Campaigns - “Paid Clickers”
Especially frequent in Asian countries (where I am based), people are often paid to click on ads. So for people who are looking to earn a quick couple of bucks, this is a joyride. As an ecommerce advertiser, you are actually paying for meaningless fraud clicks, and getting absolutely no sales.
Problem with CPC Campaigns - Software:
There are unscrupulous publishers who use automated clicking tools, such as robot programs, to click on CPC ads. Again, you are wasting money on fraud clicks by software.
Problem with CPC Campaigns - Competitors
If you’re an experienced digital marketer, you could spot a CPC ad listing from miles away. Don’t be surprised if the person clicking away behind those screens is actually your competitor. They could be clicking on your ads over a period of several days to deplete your ad budget.
The problem is not in the model of advertising, but rather the choice of models. Often, decision making circles around justifications of quality vs quantity of traffic, authenticity of clicks, vendor’s management costs etc. So choose well, the last thing you want are “worthless” ad spends.