Letter: CPA the Next Step

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I was surprised to read Ken Magill's "Go Ahead, Kill the Goose" editorial (iMarketing News, Nov. 19) that seemed to say that CPA pricing was a bad thing for Internet marketing. It is simply the next step in the evolution of an immature market where the water hasn't found its own level yet. It should also be apparent what the next evolutionary step will be, and those who take advantage of it now will be best positioned to take advantage of it in the future. CPA pricing came about because the demand for CPM-based pricing models fell.


Sellers do better when they gravitate to where the market is moving -- and run their businesses accordingly, by doing the things that minimize the amount of inventory needed to make a successful CPA sale. Buyers see a spectrum of places to advertise, from the efficient (people who support CPA efforts well) to the inefficient (people who sell tonnage, even if well-targeted, but take no responsibility for what that tonnage produces).


If, as you say, many people on the buy-side are forgetting the things we all know about efficient direct marketing, then the sellers will have a spectrum of places to take money from -- from the efficient (people who constantly test offer and creative, etc.) to the inefficient (people whose CPA offers consume massive amounts of inventory without producing much revenue for the guy running the ads).


That's the next evolutionary step. And it's coming like the tide. Markets are funny like that. They reward efficiency.


Blue Dolphin has many effective, long-standing business development partnerships -- we market magazine subscriptions for a living -- based on revenue sharing with our partners. The fact that the partners make money only when Blue Dolphin sells a magazine subscription hasn't lessened our responsibility to be efficient direct marketers one iota.


We still apply all the direct marketing principles that we always did. Our partners have a finite amount of inventory, and they're trying to maximize the revenue they can drive off that inventory. Because we rigorously apply the principles of direct marketing that iMarketing News readers know well, we continue to be a good partner. We've run several thousand tests this year, creative, offer, buy-path, you name it. That is why we have so many long-standing business partners who are happy to dedicate their scarce inventory to our offers.


And lest you think that we're all excited for CPA deals because we're on the buy-side, you should know our business model is a revenue-share with the publishers who produce the top-notch magazines we market, so every dollar of profit we drive is actually by being on the SELL-side of CPA deals.


CPM pricing was no excuse to be a low-quality producer of ad inventory. CPA pricing is no excuse to be a low-quality producer of CPA offers. Good marketers and good ad inventory producers will always have viable business models and will always be in partnership, regardless of the pricing structure. Bad marketers and bad inventory producers will always go out of business or merge with larger bad marketers and producers, and then go out of business.


It's always been like that. It always will.


Lou Weiss, Co-founder and vice president of business development, Blue Dolphin Group Inc., Wayland, MA


lou@bluedolphin.com



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