Thursday, 28 August 2008

CPX explained

Performance marketing is full of terms and accronyms. Including the famous CP"X" marketing models.

Most people have heard of CPM which is actually the only one I do not consider a performance based model. This means cost per thousand impressions. Ie. 100,000 people were shown your webbanner on a site. This does not mean that they have taken any action. As you can imagine the publishers are pushing hard to keep this CPM model as the defacto.

All the other models I do however consider performance based. CPX marketing models basically means payment of action, rather than payment of reach. In my view this is the future of marketing, it won't be long before the publishers will be forced to offer these marketing models instead.

Here I have explained those accronyms:

CPC = Cost per click, you don't pay for reaching X number of people or X number of impressions. You only pay when someone reacts to your message ie. someone clicks on your webbanner on a website and is redirected to your site.

CPL = Cost per lead, you are only paying for people who actually took action and showed an interest, ie. someone clicked on your webbanner and came to your site and actually entered their email address to recieve the newsletter.

CPA = Cost per acquisition, this is sometimes used instead of CPL, ie. some affiliate companies who generate a lead for you, call this a customer acquisition. Please be sure to clarify what is the action that you are paying for. This can be confused with cost per order, ie. a new customer acquiring a produce for the first time.

CPS = Cost per sale, this is sometimes used instead of cost per order, it means you only have to pay for the marketing exposure if someone has actually bought something from you, ie. someone has clicked through to your site and actually spent money and purchased an item on your site.

CPO = Cost per order, this is the same as cost per sale. But it is always good to check with the affiliate parter what they mean by each definition, to ensure you are paying for what you think you are paying for.

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