The question of business model is one of the keys in digital advertising. This topic is one of the most interesting on the field because it summarizes all the power struggles of the industry and is enough to explain the Internet value chain. Those models did appear gradually over time and are the proof of the increasing maturity of the mobile/web channel. What will follow is a perspective on the history frame of those models.
A short history from the CPM to CPA going through CPC
When the first banners appeared, business models had to be invented. Showing a lack of creativity, the publishers and ad networks started by adapting concepts like advertising exposure, inherited from the offline world (“brick & mortar”), to implement the CPM model. The CPC model followed quickly, caring with him a revolutionary breeze and the ambition to demonstrate that the Internet is an interactive channel where click has value, as it is the first stage of engagement, and because it generates visits. Followed the race for clicks, which meant traffic quality degradation. The idea of remuneration through quality started to impose itself and the CPA model went through a golden age.
Let’s talk about quality
Today, the models above-mentioned are cohabiting with different objectives. Among notoriety, visits and actions, it is just about making the right choice for the advertiser. However, things are not simple and advertisers saw the CPA model, which had a great ROI promise, also as a promise of a better control over the traffic quality. Nevertheless, publishers, who accepted the idea that the traffic they were generating was of quality, quickly understood the model limits. Indeed, a good quality traffic led to a mediocre quality website or poorly made mobile apps cannot be converted. The balance between advertiser and publisher is not easy to reach then.
When we think about the definition of quality traffic, it seems clear that it is a traffic that achieves the goal for which it was led to, that means conversion. So then, the problematic should focus on the given means to reach the objective and thus focus on the traffic engagement. Thus, the CPE (cost per engagement) seems to pay for the traffic that sees engaged users only; which should be quality one in theory.
The engagement measurement
The engagement measurement problematic is still at stake nowadays. Some key metrics are mentioned: time spent, recurring visit/usage, number of viewed pages, mix of the three, in-app options, push notifications…but from all the things we saw the focus is more oriented on the advertiser. For some, the only factor that explains the inactivity on their websites or their mobile app is the traffic quality. This represents a huge oversight on the issue of websites that are not well constructed and which usually are rejected by visitors or mobile apps that does not really bring any added value to the customer. On the same range of ideas, we hear often that a campaign high uninstall rate is only linked to the traffic quality…but we forget the landing page quality or poorly designed mobile apps for example.
However to have a complete analysis on the CPE, we have to mention the without-action website issue. The CPA model dominate the e-commerce field and the lead generation, but when the campaign leads to a website without subscription, where the main objective is to make visitors discover content, it seems that the CPE model could be an alternative.
Nevertheless, at Art Of Click and in other companies, we believe a user who comes back 1 week after having discovered the service or the app is a well engaged user and was one of the targeted people we wanted to attract. Yet there is still a need for real measurement tools when we come to questions like ‘why those people decided to buy my app and not another one?”.
The Art of Click Team