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How you set your payment per action will be determined by what your take is from each completed action.
You are paying $1/click for an AdWords keyword and the clicks convert at a rate of 10% for something that brings $20 per conversion. That means you are paying $10 for every $20, so your profit is $10.
If you can offer $5 to publishers for every converting visitor they send, you are now making a $15 profit per conversion instead. Now you have to ask yourself if it would be worth it to offer publishers $7 and cut your profits to $13 in the hopes of attracting more publishers (and hopefully generating more conversions in the process).
For some of my sites I could offer $10 per action and be in the black. Others I could offer $200+ per action.
But I won't.
Why? Because for $200+ per action, I'd attract every rapid-fire traffic spammer and blackhat on the internet, sending tons of garbage traffic in the hopes that 1% of it will convert. Does this makes the spammer look bad? No. It makes my site/company/client look bad.
I once saw an Overture ad for "airline accident attorney" that was being billed at almost $100/click. That's because the possible take from a converting lead of that sort is HUGE for the attorney. But how many legitimate impressions do you think an ad like that actually gets? Apply the same logic to your CPA/PPA offer.
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