The Rise of CPA Ad Networks

 

Online advertising is on the rise. With big-brand dollars fueling the marketplace and inventory on top Web sites being gobbled up, you’d think CPA (define) ad opportunities would be declining. Why then are more CPA ad networks cropping up, with the top producer reaping $10-20 million per month in revenues? Networks such as DirectLeads, Affiliate Fuel, CPA Empire, and PrimaryAds. What is it we don’t know or we’re not willing to give credence to? And what are our advertisers potentially missing?

First, let’s establish what a CPA ad network is. After all, isn’t that what an affiliate network is? Yes and no. Like affiliate networks, CPA ad networks rely on publishers who are willing to promote their advertisers’ offers, and both networks call these publishers “affiliates.”

CPA networks act more like direct CPA-deal brokers, whereas affiliate networks more passively facilitate the pay-per-performance process. CPA networks closely guard and nurture their affiliates, especially the top-producing ones, and are more likely to walk a great offer to top affiliates to ensure it gets picked up. Affiliate networks may require startup fees and advertiser prequalifications, whereas CPA networks have very few barriers to entry. And whereas affiliate networks may not pay their affiliates frequently or until a certain revenue level has been achieved, CPA networks pay affiliates more readily in an effort to woo and retain them.

Unlike affiliate networks, which focus on sales, many CPA ad networks focus on lead generation, or the “registration path,” as Shawn Collins, cofounder of Affiliate Summit (and former ClickZ columnist), explained. That may be partially because affiliate networks don’t focus on this area, but it also may be because of another advertiser misconception: that CPA ad networks cannot handle large merchants with hundreds of SKUs and enormous data feeds. Not true, say the CPA network folks. The CPA networks also feel they have a leg up when it comes to advertisers with fewer products. Unlike crowded affiliate networks, CPA ad networks have a good chance of getting the advertiser’s limited product offer picked up.

All the CPA ad networks I spoke to say campaign success hinges on the offer. Even an enticing payout won’t do anything if the offer doesn’t generate action. Offers can vary, but here are some tips:

• Reduce the affiliate payout, and minimize the number of required registration fields. This will generate more completed lead forms and ultimately more revenue for the affiliate.
• Minimize the product price point. Pretty much nothing over $200 will sell, but break that up into four easy payments, and you have a shot.
• Run hot prize giveaways. The ubiquitous iPod was it for a while there.
• Create a solid offer with an extra-juicy affiliate payout exclusively for one CPA network.

In addition to the offer, have solid ad creative and landing pages built to convert.

CPA ad networks thrive by practicing “coopetition,” each network shopping its own offer to the other networks to maximize the ad’s exposure among affiliates. Because of this, networks emphasize the importance of advertisers working with legitimate CPA players, those with solid reputations and who avoid affiliates with poor practices, such as cookie stuffing, adware, spyware, spamming, and so forth. “Know thy network and their business partners,” said Missy Ward of CPA Empire. “There are networks I would never shop my offers to.”

The general perception is CPA ad networks only cater to less savory advertisers. The truth is big household brands make up 30 to 45 percent of all CPA advertising. Big-brand sites can also be affiliates accepting CPA ad buys, such as MSN when it has remnant inventory. Don’t be fooled. Big-name publishers are selling CPA buys. But more often than not, it’s directly to the advertiser and not through the network.

Nor are most CPA ad networks working with ad agencies. Most work directly with advertisers. Are ad agencies scared of CPA ad networks for the very reasons the networks warn us of — legitimacy? After all, how legitimate do companies with names like XY7.com, YFDirect, eMarketMakers, and TheBizOppNetwork sound? Maybe these CPAers need a dose of some good branding work, eh?