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CPC Ads Earn 50x More Than CPA
Posted by Scott on 22nd October, 2007 | 17 commentsWhich model is better for publishers? Should you use an affiliate link to send traffic to a retailer, hoping that the person buys and earns you 5% of the sale price, or should you run CPC based ads on your site that earn you a cost per click?
I can tell you that for ResellerRatings and Dealighted, we earn 50 times as much money via CPC ads than we do from affiliate sales. I’ll say that again: we earn 50 times as much via CPC ads, and we’re not exactly slacking on promoting affiliate links. The affiliate bargains and coupons that we post to our ResellerRatings homepage go out to about 15,000 newsletter subscribers daily and many of our 13,000 merchant review pages link to merchant sites with an affiliate link. Despite that promotion, CPC is the clear winner for us. If you’re relying 100% on affiliate sales, you’re missing the boat.
Merchants love affiliate ads. They’re zero risk, guaranteed return on investment for merchants. Merchants reap the rewards from your traffic (both from branding and possible sales), and only pay you if they make money. Great for them, bad for you. CPC ads shift the burden onto the merchant to make sales, and pay you no matter what. Merchants are then compelled to optimize their landing pages and do everything they can to monetize that traffic, instead of just sitting back while the traffic flows in and fails to convert, which is no skin off of their teeth for referral sales.
In my last post, “The Category Winner: Tech + Shopping“, Sara of The Bargain Queen posted a comment saying that, “clothing and accessories now out-sell tech products online.” I’m sorry, what? With all due respect to Sara’s opinion, why do I care if clothing is selling better now when clothing ads pay $0.20/click and Plasma TV ads pay $1.00/click? The only time to care would be if I was relying 100% on affiliate sales and I didn’t make money unless I made sales. With CPC ads, that’s not the case. You get paid for every click, whether or not the user buys. How is that not the best thing ever for publishers? Which would you rather: a clothing/fashion site with CPC ads paying $0.20-$0.35/click, or a Plasma TV baragins site with ads paying $1.00/click. A click’s a click, and $1 is 5 times more than $0.20. You do the math.
Speaking of math, lets run the numbers for affiliate sales vs. CPC. Lets say you’re earning $0.50/click for traffic that you send to merchant X, or you’re earning 5% of all referred sales. In any given day, you send 1,000 people to merchant X, and 1% of those people buy a $100 item. In the CPC scenario, you’d have $500. In the affiliate sales scenario, you’d earn $50. I doubt that even 1% would convert and I doubt that they’d be buying $100 items, so the affiiate sales numbers would probably be even worse.
Now there are scenarios where affiliate sales could beat CPC, for sites in certain categories, and I’m not saying that affiliate sales aren’t making a lot of people wealthy. But I believe that CPC ads are far better for publishers and will earn far more money for tech/shopping sites than referral sales, if you properly monetize your site with CPC ads and properly funnel your users through to CPC based opportunities, like we do at ResellerRatings with our shop.resellerratings.com shopping engine (where everything is CPC based) and our product ad placements with direct click-throughs to merchants (right side of the ResellerRatings homepage, which are similar to WidgetBucks/Chitika style product ads).
Moral of the story: make sure you are testing a healthy mix of CPC ads along with affiliate promotions. Don’t assume that CPC doesn’t make money. If you found that to be the case, you probably didn’t implement CPC ads correctly. The aforementioned networks like WidgetBucks, Chitika, and Adsense, will help you do this.
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Monday, October 22nd, 2007 at 6:55 pm and is filed under Web Business. If you like this post why not subscribe to my full text RSS feed. You can leave a response, or trackback from your own site.
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[…] grace wrote an interesting post today onHere’s a quick excerptIn my last post, “The Category Winner: Tech + Shopping“, Sara of The Bargain Queen posted a comment saying that, “clothing and accessories now out-sell tech products online.” I’m sorry, what? With all due respect to Sara’s opinion, … […]
Generally, CPC and the “Internet Marketing” niche don’t do so well together, as everybody in the circle is fully aware of the ads. This alone has also resulted in most of the popular blogs dropping CPC completely. Nonetheless, generally, CPC does very well compared to CPA. As always, it depends on the niche, ofcourse.
Interesting article. I’d take the clothing CPC if I was generating 5x more traffic then I could with the plasma TV stuff
But yeah, you make some good points with CPC being better than CPA in some instances. In any case, a site owner should test various advertising methods and see what works best for them, as well as different implementations.
Hi Scott.
First congrats for the blog, it’s one of the few good blogs I’ve been reading everyday. It started really well.
Second I’d like to ask you about Adsense on ResellerRatings.com and Dealighted.com
I don’t get why would you drive traffic out of your site since I imagine you make more when people click your ads on your shopping engine.
Isn’t it better to just put some more shop ads at the bottom of the page then the Google ads or since visitors have already seen the shop ads at the top of the page, the Google ads become more profitable?
Cheers.
If you compare my adsense and commission junction/clickbank accounts you’ll see how much you’re right, it’s more than 50 times!
My UK based bargain and voucher site is only a month old and yes, AdSense revenue far outstrips that of affiliate based action.
Of course, this is surprising and frustrating in equal measures!
[…] Scott added an interesting post on CPC Ads Earn 50x More Than CPA.Here’s a small excerpt:With all due respect to Sara’s opinion, why do I care if clothing is selling better now when clothing ads pay $0.20/click and Plasma TV ads pay $1.00/click? The only time to care would be if I was relying 100% on affiliate sales and I … […]
I’m actually the opposite of everyone. I’ve made about 3 times more through affiliate based actions then through adsense. Although, this is mostly through one affiliate that has a high conversion ratio. AND adsense is starting to catch up.
Adsense isn’t the only CPC game in town. IMO, shopping ads (Shopping.com’s API, Chitika, WidgetBucks) will generate a lot more money for tech/shopping related sites than Adsense.
So what if you make an affiliate page and dedicate your efforts to selling that affiliate via adwords and other traffic driving methods?? Don’t you think that will be more profitable??? Alot of people share the same school of thought that people who visit tech sites are shall we say “adblind”??? Finally how do you think i can better my monetize my site?? I would greatly like to know your thoughts…Thx Scott
“So what if you make an affiliate page and dedicate your efforts to selling that affiliate via adwords and other traffic driving methods?? Don’t you think that will be more profitable???”
Maybe, depending on your PPC marketing skills, but I think it would be quite a challenge and you would have to pick just the right products to market.
I don’t see: Kontera, Chitika, WidgetBucks, or Tacoda behavioral tracking, on your site.
I am interested in your opinion on shopping.com ’s value based pricing
http://developer.shopping.com/page/ValueBased_pricing/
Since some of the other services also feed off their APR, are the golden days over? Starting to look more like an affiliate program, where click rate is dependant on conversion to sales, if that is the case, could affiliate programs end up paying better?
Only time will tell but yes, it’s something to be concerned about. IMO, everything was fine until Chitika came in with extremely untargeted ads (which linked directly to merchants) and started flooding shopping.com with poorly converting traffic. I hear that Chitika improved their conversion and are dedicated to improving ROI going forward but now, Shopping.com has been forced to implement reduced pricing for non-converting traffic. I still think that their CPC payouts will exceed CPA programs, though.
I noticed that you use a very clever way of positioning your Adsense ads between the other deals on Dealighted. Do those view numbers actually represent the number of clicks on that ad block?
And was the list with deals designed with these type of Adsense blocks in mind, or did you add them later?
“Do those view numbers actually represent the number of clicks on that ad block?” No, the numbers are just fillers to keep everything looking the same on the page.
The embedded adsense ads were an afterthought but I think they fit nicely and they are monetizing the page well.
Hi Scott,
While it may be true in general that sites make more from CPC than CPA, what’s true in general isn’t true for every niche.
At The Bargain Queen, our readers want bargains so we find them bargains. We have affiliate relationships with ~50 big brands now, so we can take the absolute best from thousands of discounted products and post them for our readers.
The readers like it; it makes us money (and forces us to be very disciplined about only posting things our readers want to wear, rather than fashion’s usual flights of fancy); and our site is no longer cluttered with adds from ripoffloans.com and dodgydiamonds.com.
For us it’s a win-win; for many other niches, it wouldn’t work at all.
I guess the rule-of-thumb is to find a way to make money doing what your readers want!
Best regards,
Sara
[…] CPC Ads Earn 50x More Than CPA A very interesting article on one companies experience testing Google CPA (Cost Per Action) compared to CPC (Cost Per Click). What stands out is that Google is going to a much much harder time figuring out which are fraudulent actions. They just don’t have access to enough data like CPC’s. […]