Will CPA Take Off in Mobile?

March 6, 2011 • 2 min read • By Anne Sherber

The story of the Web ad industry begins with the click. The ability to click on Internet ads made cost-per-click a dominant form of how ads are bought and sold. Google has reaped several billions of dollars based on clicks.

The click is under fire from two sides: those who say it traps the Internet in a “direct response ghetto” and those who believe it’s not a great proxy for sales. The question is whether the click will hold as much sway as ad dollars begin to migrate from the Internet to the mobile web and apps.

In mobile, some publishers are experimenting with cost-per-action models, although CPM and CPC are still the dominant forms of pricing. Leadbolt is pushing a “content-locking” platform that is coupled with a CPA payment model. With content locking, visitors cannot access content without first completing an offer.

Dale Carr, president of Leadbolt, said the model, so prevalent in the Android universe, will also become dominant in the iTunes store as well.

“Instead of a ‘buy once’ model, publishers can give content away for free and use the app as back-end monetization platform,” he said.

CPA is a low-risk proposition for direct-response marketers. Carr believes many advertisers will begin to question just how high the click-fraud rates are online. “Even Google is struggling with click fraud,” Carr said, citing estimates that the fraud rates on some sites can be as high as 70 percent.

CPA is not without its issues. Generally the action for which an advertiser will pay is pretty narrowly defined. If a consumer clicks on a link for a book related to website content and does not buy that book, but does purchase another book, usually the website publisher does not get paid.

In the mobile space, this may present less of a problem; consumer attention spans are shorter, there is less random surfing. Consumers surfing the mobile web are more likely to be looking for specific content.

There is, of course, the question of whether mobile users will be more willing to complete an offer in order to get content.

“If the content is nonsense, the bounce rates will be high.” Carr said.

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