Email Marketing - How Much Does It Cost?
Email and other Internet marketing approaches have a distinct advantage over non-Internet marketing: Statistics that measure the success can be obtained easily and inexpensively. Almost every aspect of an email marketing campaign can be tracked, measured, and tested, as we discussed in an earlier blog called Tracking Your Email Campaign.
But, how can you determine how many mailers reached a physical mailbox or how many of those that did were opened and then dropped in the trash? It would be neither simple nor inexpensive to determine these things.
Just as different things in an email campaign can be tracked, there are different ways that advertisers can be charged for delivery and other services ... and different ways that the effectiveness of a campaign can be related to its cost.
The most common methods of paying for email or other Internet advertising include the following:
- CPA - This stands for Cost Per Action or Cost Per Acquisition.
- PPA - Pay Per Action is another name for CPA.
- PPC - This is Pay Per Click. This is also called Cost Per Click (CPC).
- CPL - This stands for Cost Per Lead.
- CPI - This is Cost Per Impression.
- CPM - This is for Cost Per Mille (Thousand) Impressions. It can also mean Cost Per Thousand names on an email rental list.
CPA - Cost Per Action or Cost Per Acquisition
When a recipient of your email marketing message clicks on a link in the email, this is called taking action. Whether the objective is to get more users to sign up for an email newsletter, download a white paper, or purchase a product on the web site, a conversion is tallied, when the user performs the desired action.
Perhaps it would be better to call the Cost Per Action (CPA) approach to charging Cost Per Conversion instead, since the advertiser pays for each specified action (conversion). Bear in mind, however, that in some contexts, a conversion only refers to gaining a new customer. As always, you must be aware of how a term is used.
When CPA is referred to as Cost Per Acquisition, the focus is on the fact that most offers by advertisers are about acquiring something ... typically a new customer by making a sale. The term Cost Per Acquisition is actually more specific, but not all Cost-Per-Action offers can be accurately referred to as Cost Per Acquisition.
CPA is often considered the optimal way to buy online advertising, since you only pay if the desired action takes place.
Cost Per Action (CPA) Versus Cost Per Lead (CPL)
CPA is focused on an immediate action, whether it is a sale or a newsletter signup. However, with CPL, the advertiser is paying for the contact information of an interested lead ... someone whom the marketer can engage in multiple ways ... for example, signing up for the newsletter, joining the community site, or joining a rewards program. The objective is a relationship which includes multiple sales over the long run.
Cost Per Impression (CPI) or Cost Per Mille/Thousand (CPM) Impressions
An impression is the loading of an advertisement onto a user's screen. This could happen when the user opens a marketing email that was received or when the user visits a web page that displays the ad.
Just as we discussed for click-throughs, you have to know how the value is being calculated. Does the ad server increment the count every time the ad is displayed or are reloads and other non-qualifying activities excluded from the tally?
Very simply, CPM estimates how much it costs to show an ad to one thousand viewers.
With opt-in email marketing, CPA (a click-through, for example) or simply the cost per email for delivery are more often used as the basis for charging. CPM, in this context, typically refers to the cost per 1000 names on a rented email list.
Per Per Click (PPC) / Cost Per Click (CPC)
The idea behind PPC or CPC is that an advertiser only pays when their ad is clicked. CPC is the amount of money an advertiser pays the search engine or other Internet publisher for a single click on its advertisement ... a click that brings one visitor to its website. Although these terms aren't typically used in the area of email marketing, they are included because of their extensive use in the general area of Internet marketing.
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