Why Don't Parking Companies Don't Offer More CPA?

[BrianCarr]

Hi Folks:

With the ongoing machinations over TQ Scoring and PPC providers, I get asked this all the time -- when will domain parking companies sidestep CPC providers and go straight to CPA, where click quality and higher revenues are all but guaranteed?

Here are three reasons why I think CPA is effective, but not quite a wholesale blanket replacement for CPC at this point:

1) Breadth of categories. CPA offerings are strongest in Education, Loans, Autos, Insurance, Mortgages/Real Estate, and some others, and to widely varying degrees. Beyond that, the CPC revenue rates are much better than CPA adoption rates in the tail categories and domains, at least for now.

2) Domain-level reporting There are plenty of nascient CPA companies out there, many with a different expertise and supply of advertisers (some specialize in education CPA, for example.) Not all of them we've tested had the capacity to report back on an hourly basis on the activity on a domain level that we'd require for ourselves and our users for real-time reporting. Early on, for example, we'd get daily reports in an e-mail, not a file for parsing. And sometimes they skipped a day. But they were wiling to pay the highest payouts to keep the business. They are getting better, though, in part due to what companies like ours are requesting, and we do have providers now that report on a daily basis in an automated fashion, but still not real-time.

3) Qualified leads OK here is a big rub. Most CPA agreements with major brand-name ad clients call for at least 30 and sometimes up to 60 days of leeway on their end for them to determine if you sent a qualified application worthy of being paid out. Credit Card applications, for example, require credit check approvals, etc. They usually do not take 30 days to reimburse, but even a two-week lag makes it difficult to report on and stomach -- especially at a time when daily real-time CPC revenue stats are the norm. In addition, some CPA forms that we tested were extremely onerous for the users for example, some credit card and loan advertisers often required users to enter their Soc Security number, which can contribute to a high abandonment rate, and loss of any click revenue. So it raises the question -- would domain owners used to daily revenue reports be willing to wait weeks to see if they made any money?

In addition, we've seen some parking companies toy with the idea of paying domain owners 25 cents, or a dollar or whatever, per click on a CPA ad. The positive is you get paid right away. The negative, of course, is that the company could be making upwards of $40 if that CPA form is successfully returned. That's flagrant abuse of the quality domain name owners (the one with a quality lead is out $40, while the ones without quality leads still get paid) and not something we'd entertain on our platforms at this time.

Regards, Bcarr

[Banned: AlienGG]

I agree, but fix your title please.

[petrosc]

Now that you mentioned TQ scores, will we be able to see the score of each domain in our account?

p.s thank you for the useful info btw

[BrianCarr]

We've been told that TQ Scores won't be valid for another three weeks or so, as the systems do their compilations of more data and do their calculations. So it's just too early in the rollout to rely on yet -- just like a horse leading the race at the quarter pole may be well behind the field when the race is completed. Any score now may be totally invalid in three weeks.

[Banned: AlienGG]

So the TQ Score doesn't reflect their stats already in the database I guess.

[dnalias]

Mr. Carr sorry if you find this to be intrusive on your thread, but I would really appreciate your feedback on my thoughts.

Interactive ad agencies need a TQ system for their publishers also.

IMO the CPC model is much more transparent. We all know what the bid rates are for CPC, but we don't know what the advertiser is paying the ad agency? (to some degree at least). Also I completely agree with you about real-time reporting, and the 30-60 day clauses.

As a result a generic domain that generates high quality traffic gets lumped into the same "publisher network" of said agency and the CPA leads are even across the board, whether you have high, mid or low quality traffic. The low quality traffic puts a major strain on the advertiser. Just imagine a call center, now imagine having to make 10 calls (generated from CPA leads) 8 ot of 10 are garbage, 1 requires a follow up, and one instantly converts. In the mean time all those leads are paid the same CPA. Logically we can assume the one high quality lead came through direct navigation but again everyone is paid the same CPA. In the mean time the agency uses that high quality lead to generate more sales, and increase CPA costs to the advertiser based on better overall conversion rates. Again this is all leveraged on the publisher who generates the highest quality traffic (the one with the generic domain). This is the aspect of the industry that is not transparent enough.

IMO there is a lack of technology in this industry. If there was a proper backend that could tag each lead and determine which publishers conversion rates were higher and paid that publisher (domain owner) based on better conversion rates then the value of direct navigation traffic would increase as a result of increased conversions from CPA.
(maybe goog’s beta CPA model will do this?). Please note: I understand that CPA rates can be negotiated with agencies, but again there is a transparency issue which negatively effects the broad market.

At the same time major interactive advertising agencies are categorically not interested in this. There business is based on volume and unlike the CPC model; the CPA model pays the same rate. The agency’s GP is higher when they lump all the publishers together, charge a flat rate to the advertiser and pay a flat rate to the publisher.

In the mean time I think there is tremendous opportunity for companies such as yours who hold and manage significant amounts of direct navigation traffic in specific verticals. The down side is you have to go out and develop your own advertiser network, but the up side is you already have the publisher network, in fact you own it. NO REV SHARE, HIGHER CONVERSION RATES, HIGER CPA. = Higher Net Income.

When is NameMedia going to put up a booth at Ad-Tech and sign up some advertisers?

If domain traffic purchased on a CPC model converts twice as well as general search traffic then we can assume that domain traffic purchased and sold on a CPA model does the same. In fact I would bet that the conversion rates are in excess of 2x.
(reference: Study done by Efficient Frontier, found here: Domain Name Traffic Converts Twice As Well As Search . Rick Schwartz: The Best Kept Secret About Domain Traffic Sale Conversions)

Bottom line is both CPC and CPA traffic from a generic domain owners point of view “trades at a discount”. Again I quote Rick Schwartz.

[BrianCarr]

Dnalias --
Great thoughts.
1) The technology is getting there in some instances, where we can tell that your domain was the one that generated a $25 lead that was confirmed by the advertiser agency, and you get paid and some other lead does not get paid. The winning result may be a hybrid model, where you get paid market rate for a simple click, and $25 if a successful lead form.

2) Good point on the ad agencies. And let's not assume that the lead is only being "sold" once. Consider agencies that farm that lead out to three or four banks or loan companies who then -- in their own marketing language -- "compete for your business?" What if they sell a $40 lead four times and only pay the publisher for one?

==regards, bcarr

[dnalias]

Thanks Brain,

Originally Posted by BrianCarr

Dnalias -- Great thoughts.
1) The technology is getting there in some instances, where we can tell that your domain was the one that generated a $25 lead that was confirmed by the advertiser agency, and you get paid and some other lead does not get paid. The winning result may be a hybrid model, where you get paid market rate for a simple click, and $25 if a successful lead form.

Agree, more or less the same technology as an affiliate tracking program, but it still does not represent or give a TQ for those leads?

Originally Posted by BrianCarr

2) Good point on the ad agencies. And let's not assume that the lead is only being "sold" once. Consider agencies that farm that lead out to three or four banks or loan companies who then -- in their own marketing language -- "compete for your business?" What if they sell a $40 lead four times and only pay the publisher for one?

==regards, bcarr

Absolutely, but again this is negotiable by the advertiser. We can assume that a legitimate agency abides by their contract (some really don't). As a result exclusive CPA campaigns demand much higher pricing. If this is true why can’t high quality traffic, that generates higher quality leads, demand higher pricing?

In addition some of the lead generation techniques, (referring to the “A” in CPA) can be very deceptive and tricky. There is much more we can talk about this area.
Point being the good traffic is getting lumped in with the bad traffic and the CPA pricing is being averaged out across the board.

Your company and a few others I can think of can change this model.

Thanks again

[sano]

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