Digital Agency Media FAQ

Digital media is traded on two key metrics: Cost per Thousand (CPM) and Cost Per Action (CPA).  CPM is based around audience delivery i.e. the number of people see the campaign, and is not therefore directly related to campaign performance. CPA is a measure of actions which can be defined as clicks, sign ups, sales, subscriptions or log-ins etc. This is directly related to campaign performance. Clearly the more budget that can be traded on CPA activity the more your commercial risk will be reduced. CPA as a form of media buying sounds great and in many ways, it is.  However, there are a couple of limiting factors that users need to be aware of. First, you are often bidding against other advertisers for CPA activity. In other words, they too are bidding for actions from the same target market.  You can bid as high as is economically sustainable for your business, but you may reach a point where the economics do not work  for your product. This is a key area and it’s important that you have understood how you are calculating ROI before commiting budget. A good revenune ROI does not mean a good profit ROI. You can read more about calculating online marketing ROI here. Second, volumes can be quite low, so you cannot usually depend on CPA activity to fully populate your sales funnel. You may need to use other online marketing techniques to drive traffic into your sales funnel.