Confusing Internet Marketing Terms Demystified (Part 4) – When 3rd Party is Involved
Ok, I feel you.
This online/internet marketing terms must be spinning your head by now, yes?
CPC, CPM, CPL, conversion rate, banner ad optimization, split testing, bounce rate, blah blah…
As one of my college professors used to say to anyone who had lame excuse about not making the lecture…
… let me get to the point.
Ok, what is the point of all this?
YES, getting a freakin’ SALE or a freakin’ LEAD (that will lead to a sale).
Now, if you haven’t noticed, I don’t advocate companies (small OR big) do their own lead generation.
We, at Solar One Media for example, spend 6 to 7 digit figures on various lead generation programs, so we get
- preferential advertising costs
- volume purchasing power
Plus, this is ALL we do. We don’t do anything else.
Well, so say you do decide to work with a lead generation company.
You might might to speak their lingo, right?
CPA (Cost per Action)
Cost Per Action, with action being a sale, a download, a signup, an install, or anything where the person does SOMETHING.
CPA is a general term people use to describe a third party company that’s in the business of promoting another company.
A “CPA network” is different from a “CPC/CPM ad network”.
CPC/CPM ad network is charging you for traffic on their internet properties or their publishers’ properties.
CPA network is charging you for their talent, purchasing power, and it’s network of publishers (if they have an affiliate program).
(A CPA network can be based on CPL, CPS, or combination of both.)
CPS (Cost per Sale)
Probably the OLDEST thing form of CPA is CPS.
This is probably the simplest.
If I sell a $100 product and you bring a customer that buys, I give you 10% commission.
So the CPS is $10.
This is nothing new – ever hear of realtors, mortgage, franchisors, etc?
In fact, a BROKER of any kind is really into the CPS game.
CPL (Cost Per Lead)
As an advertisers, you don’t care about CPC, CPM, blah blah blah..
You just want 1 thing and 1 thing only: who is interested and what’s their contact information?
This is what’s known as COST PER LEAD.
CPI (Cost per Install)
This is a new kid on the block.
Cost per install – This is used in the game world where 3rd parties are paid based on an installation of a game.
Really, same as CPL, but people like to use these lingos for no apparent reason.
(My guess? Keep the outsiders out.)
You are a wine retailer.
You sell wine to people on the street.
First problem in the distribution?
Umm.. you need WINE.
So you start learning about wine making.. from buying the proper land in the right temperature, buying the right seeds, hiring the right farmers, buying the right equipment, making a deal with the water company to give you water, etc etc.
That’s like learning CPC, CPM, CPA, direct response copywriting, split testing, analytics, web programming, hosting, etc
Then you realize that you can probably make more money buy BUYING wine from a wine wholesaler and marking it up rather than investing the whole company’s resources into learning this stuff.
So you contact a wholesaler (i.e. CPA network) that knows how to buy the right material (i.e. traffic from the ad network), package it into a nice bottle (i.e. actual information/download/sale), and you get the benefit (getting ROI on your leads).
To break it down
- a traffic source (like search engine, blog, social media, site, etc.) is like the farm where things grow.
- a CPA network – They’re like the farmers that lease the farm from the traffic source. They have to understand which part of the farm best grows the crops best, how much fertilizer to use, what tools to use, etc.
- you (lead buyer) take that farm product and sell it to the market (the end buyer)
NOW, do you see why partnering with a lead generation company makes sense?
Don’t learn farming.
Learn to buy the RIGHT farm products so that you can be good at what you do: being a retailer.