Why CPA? How To Determine Offer Payout? in Advertiser's minds (5)
Why CPA? How To Determine Offer Payout? in Advertiser's minds
Hi Stackers,
i have a several question for the mod/thought leaders/anyone in here about the offers from the advertisers.
actually i got this question inspired by @iamattila post on @Mr Green 's thread in here : http://stmforum.com/forum/showthread...ght=sweepstake
so, let's get into the mind of the advertisers. several popup question goes into my mind :
even though i know several variables such as CR, GEO, etc will determine most of it however :
1. i wonder how they determine the offers A = $0.9 payout or B=$6 payout or cost per action?
2. why if i see on some new leadgen offers, or diet pills offers, they mostly have this pattern on the cost per action they willing to pay ?
3. how much ROI they expected with the cost per action they have to pay?
4. how much cut the network enjoy?
5. how to say it's a quality lead? besides it's convert? ( on a leadgen offers )
6. if i am an advertisers, why would i want pay cost per action? i just can setup my internal media buying team after i got my offers running with the affiliates and just doing the same things the affiliates did which will make my cost lowered down 
let's think not only the consumers side, but also the producer side!!
thanks in advanced for the answers, and let's discuss!
Bump, any ideas guys?
The simple math behind the CPA is CPA = LCV - ( LCV * x% ) where x% is whatever percentage of the revenue you want to keep to yourself and LCV = Lifetime Customer Value, which is the total of $ you'll squeeze from that lead over it's lifetime, the rest is the CPA paid to the affiliate.
As to why they don't do the mediabuy themselves, well some do, but these are 2 completely different jobs, monetizing those leads correctly or managing whatever products they have takes a lot of time & energy, and it's usually easier to let affiliates do the job and only pay them for the leads instead of dabbling themselves into traffic sources, landing pages, etc etc..
Basically affiliate traffic is risk-free and available in huge volumes ( if the offer converts ), they only need to monitor fraud, and that is the use of CAPs you see when you start pushing an offer, till the advertiser can see if they're actually winning or losing money on your traffic.
Mehdi
Listen to Mehdi!
Couldn't have said it better myself. Nice summary @Mehdi.
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