Which Marketing Methods Can Reduce Your Company’s Risk?

The Four Performance Based Marketing Methods

Many small businesses face an uphill battle each and every day. With limited funds and resources, it can certainly be difficult to justify large sums of money going to a marketing budget. But not only that, even if you do commit enough money to get a campaign off the ground, you still have no assurances that it will produce even a single lead, let alone any sales. In the past, marketing often resembled a 'guess and hope for the best' methodology. However, today even small business owners can afford and take comfort in a marketing practice that limits risk and provides a huge upside for sales: performance based marketing.

CPM - Cost per thousand

This refers to the cost an advertiser pays for 1,000 views or impressions.

CPC - Cost per click

With the CPC model, the advertiser is charged for every click on the ad. The cost of the click is determined by the advertiser’s bid and influenced by the amount of traffic and competition for any keyword.

CPL - Cost per lead

The CPL model allows the advertiser to pay only for sales leads. This often comes in the form of form submissions and inbound phone calls.

CPA - Cost per action

This model is similar to the CPL model, but can refer to any specific action outlined by the advertisers such as an app download, an online purchase or an appointment scheduled.

Which methods help reduce risk?

Although each of these models have their own pros and cons based on each individual advertiser's needs, for our purposes there are only two that can truly protect and reduce your business’s risk: CPL and CPA. Although the CPM and CPC models oftentimes reach a higher number of potential customers, they come with more moving parts, lower conversion rates and, ultimately, lower quality leads. Because of this, the seemingly low cost to conversion with CPM and CPC can easily inflate and cost you more money for worse leads. As more marketing and advertising companies continue to focus on lead generation, the CPL model continues to grow while the rising costs of keywords and waning attention of internet browsers make CPM and CPC advertising much less profitable.

The CPL and CPA payment methods take much of the uncertainty out of the equation and allow you to more accurately assess costs and directly reduce risk. By buying leads directly (CPL) or only paying on the actions of your choosing (CPA), you always guarantee yourself a chance at closing the sale or achieving the desired action. Even though paying on a CPL or CPA basis costs you more per transaction, your qualified leads give you the best chance at closing the deal because the leads were motivated enough to fill out the lead information and willing to buy. Additionally, if you have software that allows you to buy or receive leads in real-time, you can expedite this process even more and quickly contact your leads at the time when they are most interested and ready to buy.

CPL and CPA are certainly not fool-proof ways to completely eliminate risk in your marketing spend and aren't completely applicable in all industries or verticals, but they are the best performance based marketing techniques for consistently acquiring leads while limiting costs. If you are struggling to find success with your CPM or CPC campaigns or would simply like to supplement your current lead flow, allocating resources to CPL or CPA campaigns may be the solution for you.