Get Your Money's Worth From Lists
The difference is that we are now speaking about the pricing of e-mail lists. Truth be told, the "we" is not accurate. The newbies, meaning people who have emigrated from the dot-com fiasco to their newfound home in direct marketing, are talking about a new method of list pricing. Cost per acquisition is the so-called new method.
In this corner we have the tried-and-true cost-per-thousand fee structure of opt-in e-mail names. In the other corner is the challenger, cost per acquisition, ready to take the fee-structure crown.
The sales pitch for CPA is that you pay only for what you get. The question is, what are you really getting? And what variables could affect the outcome?
The following is an analogy to consider. It is lunchtime. You really want a turkey sandwich. You go to the deli counter and place your order. The counter person asks, "Do you want turkey roll for a lesser price or freshly roasted real turkey for a higher cost?" They are both called "turkey," but are you privy to the "unknowns" that are really in that turkey roll?
Opt-in e-mail lists are opt-in e-mail lists, right? Well, just as there are mysteries lurking in the cheaper turkey roll, there are unknowns that abound in many CPA opt-in e-mail lists. The adage "Too good to be true" is a reminder to take a closer look at these so-called bargains.
As marketers have begun to look for deals, the concept of paying for leads rather than for names has taken hold in the opt-in world. This arrangement is similar to the per-inquiry deals in space advertising.
The concept by nature never really took a foothold in the postal marketing arena, except with card decks, because of the postage-cost factor inherent in that particular marketing medium. However, opt-in e-mail seemed to the untrained eye to be the ideal testing ground for a per-inquiry-type pricing structure.
The shift in risk seemed to go from mailers to list owners and brokers. The burden of proof was placed on the list owners to put their money where their performance was. The problem was that all opt-in e-mail lists are not created equal. It is a case of apples and oranges.
It is true that opt-in lists usually cost $200 to $300 per thousand names. And struggling mailers looking to squeeze budgets dried of cash flows tend to think this is a monumental expenditure. However, the CPA pricing structure could be seen as a case of marketers being penny-wise and pound-foolish.
In an effort to find lists for the "bargain prices" of $30 to $50 instead of the traditional $200 to $300, mailers may be getting the leads they are paying for - but are they qualified leads?
Many brokerage houses offering these CPA lists have adopted the practice of developing A/B files to relieve the stress and burnout of some lists. The A list used for CPM rentals is a higher-quality file with demographic data, while the B list used for CPA rentals is a limited demographic file. So the question of getting what you pay for comes into play.
A list that originates from a known source with a prospect universe that is defined and known to be viable is a good investment or, at least, a low risk. A lead from an unknown source can be seen only as speculative and absolutely high risk.
It is not all bleak. There is a ray of sunshine when it comes to CPA. What the CPA trend will do is force brokers to find their mailers better lists, which in and of itself is a good thing for the entire industry. Brokers recommending CPA - or even CPM - files that do not perform are doing a disservice.
But the burden does not rest totally on list owners or brokers. Mailers looking for good deals need to take a hard look at their own criteria. There is not a list on the market that will make a bad offer look good, or turn poorly written copy into great literature.
That is the flaw in the CPA deal.
Price, offer, copy/creative have nothing to do with the list. Why should the list owner carry the burden? There is also the matter of the transmission of the list from the service bureau - who pays for that?
The large, multigathered, multi-million, no-one-owns-what, so-called triple opt-in bases could offer these CPA deals - after all, transmitting these files is only the cost of electricity. But ultimately the marketer will pay a price. And when the smoke clears, it will probably be more costly than the traditional CPM.
The reason is, if it made good sense, then direct marketers - who are number crunchers at heart (unlike the newbies) - would have demanded these deals years ago.
As with all trends, CPA has yet to be proved viable. However, the pressure for such deals will remain. Ultimately, it will come back to good, well-developed direct marketing plans being presented to good, well-developed marketing lists - just as the stock market prices will have to find their level in a rock and roll economy. When it all settles, a program will be found that pays off for advertisers, list owners and brokers.