What’s the ‘A’ In CPA For Display?

For years now, marketers have been able to buy display advertising, either by cost per impression (CPM), cost-per-click (CPC), or cost per action (CPA). More companies are opting for the CPA route, which on the surface seems like a much safer bet.

True to its word, CPA advertising means you only pay when you get an action or conversion, which can vary depending on the advertiser’s business model. Some common actions include a lead, an order, a download, a white paper view, or a demo.

The benefit is that the advertiser doesn’t pay for a non-action generating activity. Most marketers are savvy enough to negotiate the price they pay for actions from display networks. However, they don’t negotiate the terms as to what constitutes an action.

When buying display in a CPA model, there is typically a window of time in which a display provider can claim credit for an action. That window of time is defined as a look-back window — typically 30 days — from the time of conversion. So, in essence, any customer of yours that saw or clicked a display ad, as well as those that coincidentally was on a page with a display ad that they didn’t even see, in that window of time and converted is then claimed by the display network as an action that they deserve to be paid for.

Some display networks claim to have a reach in excess of 90 percent. By virtue then, more than 90 percent of your orders will be claimed by a display ad network. Does any marketer truly believe a display network deserves to be credited for more than 90 percent of their orders?

Unfortunately, marketers without the ability to see view through or post-impression data are forced to accept these terms at face value. Other marketers that have the ability to track an entire purchase path and truly see the impact of view-throughs and clicks on display ads, have the ability to define what truly constitutes an action worthy enough to pay a display network.

Let’s look at three examples of purchase paths that involve display, and how a marketer can use this data to negotiate a better definition of an action:

  • Purchase Path 1: Display ad view through promoting diamond earrings -> Paid Search ad for diamond earrings -> Paid search brand term advertised in display ad -> Conversion
  • Purchase Path 2: Paid search ad for diamond earrings -> Display retargeting diamond earrings -> Conversion
  • Purchase Path 3: Display ad view through promoting diamond earrings -> (29 days pass) Paid search ad for diamond earrings -> Conversion

In Purchase Path 1, it seems clear that the use of display promoting diamond earrings was the impetus for the paid search that followed and the ultimate conversion. All marketers would agree the display was integral for making this action occur.

In Purchase Path 2, the person already had interest in looking for diamond earrings, they didn’t buy immediately, then were somewhere on the Internet when retargeting kicked in, and then they converted at a later point in time. In this scenario, it’s debatable if that display ad was necessary in getting that consumer to convert. The consumer might’ve already decided to buy but was just taking their time, when a retargeting ad was shown. In that case, the display ad was unnecessary. Or, the consumer could’ve been on the fence about buying diamond earrings, and the retargeted ad pushed them over and led to the action.

In Purchase Path 3, the sequence is similar to Purchase Path 1, except in this case 29 days elapsed between the display impression and the paid search ad. Most marketers, and a lot of advertising research, would agree that an impression’s rate of decay on a consumers mind is less than 29 days. Therefore, it’s unlikely that this impression had a bearing on the paid search that ultimately led to the sale.

A display ad network would’ve received compensation for the three actions in the three purchase paths because an impression was served within that 30-day window. But marketers can clearly see that the value of those impressions in the three examples is different. Shouldn’t we be paying display ad networks on some sort of scale for actions versus treating all actions that were exposed to display as being equal value?

Some of our clients have the purchase path data described above and have successfully negotiated the definition of an action to a display network. In some cases, even though an impression was served (Purchase Path 3), they aren’t paying one cent for that action.

In other cases, they’re paying partial credit (Purchase Path 2). Finally, when it’s 100 percent clear that the display impression was 100 percent integral to the action, they’re paying the full CPA.

Attribution is about giving credit where credit is due. Attribution is also about paying for credit when credit is due. With the ability to track the entire purchase path, marketers now have the ability to negotiate and define what “A” is in CPA when it comes to display.

Join us for SES San Francisco August 16-20, 2010 during ClickZ’s Connected Marketing Week. The festival is packed with sessions covering PPC management, keyword research, search engine optimization (SEO), social media, ad networks and exchanges, e-mail marketing, the real time web, local search, mobile, duplicate content, multiple site issues, video optimization, site optimization and usability, while offering high-level strategy, keynotes, an expo floor with 100+ companies, networking events, parties and more!

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