How I Apply CPA to My Daily LifeI just got off the phone with the millionth advertiser/agency that is interested in a cost-per-acquisition price structure for my product. Although we sometimes offer this type of model depending on the advertiser or objective, it is quite infrequent, and this made me think of several good applications for CPA models in my daily life.
• Scenario one: I go to the local Blockbuster to rent a few movies on a Friday night. As I get to the cash register, I tell the cashier I want to pay only for the movies that I like and will let her know which those are when I return them. She obviously balks at this proposition. I tell her, like any smart consumer, that if Blockbuster truly believed in the products that it rents and sells to the public, it would stand behind them. And, after all, why should I take all the risk?
• Scenario two: I am getting married next April and I just went to look at some invitations. When the sales representative asked how many I need and began to run the costs, I stopped her. Again, it would be a good idea if I pay only for the invitations that "work" or for those people who can attend my wedding. If the representative's invitations are so beautiful and top of the line, she should have no problem with this - I mean if she believes in her product and all.
• Scenario three: I just got DirecTV in my home. There was a huge problem with my first bill. This company had the nerve to charge for all of the month's programs, even though I really did not watch all of them. I called the billing department and asked to speak with a manager. Why? Because as a very important consumer, I want to be billed only for the shows I watch, regardless of their costs. Seems fair to me.
And of course, all consumers can use this CPA principle with any food or restaurant service. What would McDonald's do if I offered to pay only for the fries that I ate? Just food for thought here. Or if a company wanted to pay for a billboard based only on how many people drove by and looked at it versus the space occupied.
The main problem with CPA requests is they tend to focus on quantity of leads versus quality. Some of the traditional direct marketing principles and testing variables are thrown out the window in lieu of a CPA model. In most CPA pricing-structure discussions, advertisers never mention audience targeting, offer testing or creative. It is analogous to my vice president of sales requiring that I produce 40 cold calls a day without concern as to whom I contact, quality of the prospective advertiser, or content of the call. I could have 40 30-second calls of no value, or I could have one call per month that lands a $200,000 marketing campaign.
Sure, the market is horrific and everyone is tight on budgets; but shouldn't this be the time for us as marketers to embrace what we have learned rather than take the easy, but not always long-term profitable, way out? Back to basics: Test, find what works and produces the highest quality, long-term clients and spend your advertising money wisely, but do not sell your company short for a seemingly short-term solution.