If you’re wondering what the heck performance based advertising is (or why you should even care) stick around and hear us out.
Performance-based advertising, or performance advertising, is an advertising method used when the purchaser pays only when actual results occur. In an age where it’s much more accessible to measure user actions resulting from advertising, this is considered one of the safest advertising forms. If you don’t get results, you don’t pay. If you do get results, you will pay (but the results will be worth the spend).
The performance based advertising strategy was designed to help advertisers achieve specific and measurable financial results within a short period of time without the risk of taking a gamble. This type of advertising is often used to boost sales, retain the audience or increase loyalty. Every cent spent on this kind of advertising is designed to be effective and to help the user maximize return on their investment.
Still with us? Good! Here are the different pricing models used.
CPC
CPC (cost-per-click) charges advertisers only when the consumer clicks on the advertisement in question.
CPL
CPL (cost per lead) allows advertisers to pay only for qualified leads as opposed to clicks or impressions. This type of ad is often used in lead generation campaigns, so the ultimate goal for an advertiser is to collect data such as emails from potential customers. You might use a CPL model to promote newsletter registrations which might be later used to generate sales.
CPA
CPA (cost per acquisition), allows advertisers to pay for a specific action. This goal might be a sign-up, a sale, an impression, an engagement, obtaining a qualified lead, spending a certain amount of time on an advertisement or even guiding the user to a designated section on their website.
CPS
CPS (cost per sale) is an advertising model based on actual sales. For instance, if a customer follows an affiliate link to the advertiser’s site and makes a purchase in accordance with the agreement, only then will the advertiser pay.
CPM
CPM (cost-per-mille, or cost-per-thousand) is a model that charges advertisers for impressions, or the number of times people view an advertisement. Advertisers are charged even if the target audience does not physically click on the advertisement.
Always be testing
One of the best parts about performance-based advertising is that the campaigns are built for frequent A/B testing. Since the advertiser only pays when results start rolling in, there is plenty of wiggle room to make adjustments and tweaks without the risk. This ensures the advertiser will have the best opportunity for an excellent ROI. An unsuccessful campaign can always be revisited until it yields the desired results.
Curious to try this out? Contact us today.