Brent Hodgson, Copywriter

I received an e-mail yesterday telling me about a lead generation strategy which was a replacement to traditional Google Adwords and SEO.

“I don’t want to miss out on this!” so I clicked the link.

So what was it?…

Cost Per Action (CPA)…

If you haven’t heard of Cost Per Action (or CPA), the long and the short of it is it’s an advertising system where you only pay whenever someone completes a particular action…

That could mean in a survey, signing up to your newsletter, downloading a discount coupon - anything really.

For those of us in the online direct marketing industry, this is adds another string to our online marketing bows - we now have another way to get leads for our direct marketing businesses.

So (to use Adwords as an example) you don’t have to worry about Click-Through-Rates, or your on-page conversion rates… because all you pay for is the end sign-up.

And for people who run e-zines, blogs or newsletters, it’s another potential revenue stream which they can use in their content.

(ie - “I hired the DVD of ‘The World’s Fastest Indian’ last night… Oh by the way, click here to download a Blockbuster 2-for-1 voucher if you want to see it too.”)

Great, huh!

But it’s important to remember…

Cost Per Action isn’t new.

Although internet marketers are just now cottoning on to using this strategy, it’s been around for a while.

Even here in Australia, companies like Commission Monster have provided a Cost-Per-Action services to advertisers and web-site owners for years.

And more recently, (in June this year,) Google was testing a Cost-Per-Action alternative to Adwords in the hope that it would get rid of click-fraud.

But Be Careful About The Value Of The Lead

Let’s face it - the best, most qualified leads you get are the ones you find for yourself.

Either through PPC campaigns, or via natural search.

Take it from someone who has used Cost Per Action before… The leads you get through CPA’s are rarely as good as the ones you get for yourself.

Especially if you’re running a niche business.

Let me explain why…

If you’re attracting leads for a niche online business on [say] trout fishing (to use the time-tested example)…. You set up your Adwords campaign, target specific keywords… monitor those keywords to see which ones are performing and which one’s aren’t…

By a process of refining your Adwords campaign over time, you end up targeting a very specific type of fisherman who has a high likelihood of buying from you.

On the other hand, through a Cost Per Action campaign, targeting leads becomes more difficult.

For example - someone who runs an e-zine on deep sea angling might want to make a few bucks and decide to run a CPA campaign.

Of course, they want to make as much money as possible…

They don’t care how qualified your leads are. They just want people to take whatever action it is that they will get paid for - and they want as many people to perform that action as possible!

So it’s in the best interests of the deep sea angler to say “Hey - There’s some great fishing tips here in this guy’s newsletter. I highly recommend you click here to sign up.”

…even though deep sea anglers probably won’t be interested in freshwater trout fishing…

Are CPA Campaigns Worth It?

I give them a definite “maybe”.

Just like with Adwords, it’s a numbers game.

You need to weigh up the value of the leads you’re getting, based on you chances of making money out of them … And never pay more for a lead than what the lead is worth.

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