Cost Per Lead Model Advertising – What price to pay for leads

With more and more digital agencies mushrooming across India. Everyone is ready to sell the Online medium as 100% performance driven metric with every media property/placement/unique users reverse calculated back to cost per acquisition or cost per lead.

When an year ago we just saw Classifieds and OTA’s like Makemytrip,Naukri,Shaadi, Bharatmatrimony advertising and pushing for CPA model today agencies are pushing same to Financial entities to NGO’s.

Cost per lead campaigns on digital medium have been falling in price points from INR 400 per acquisition to INR 50 per acquisition and trust me their is no science to such except for market economics of marketplace dynamics with players coming in to pick up purchase orders under cutting each other.

At the end of it its the advertiser which is still suffering by even acquiring leads at such price points as their is higher cost to qualify them via call centre which agencies are now starting to realize with increasing number of players ready to give them leads at price points lower than their expectation.

Recent meeting with brand manager of a leading Insurance player shed light on dirty tactics of account managers at digital agencies and how they went in pitched to deliver a great scale of Leads at price point less than INR 75 which was almost 50% less than own media plan estimation of the brand manager. Once they went through with the campaign the agency failed at 2 points

i)  Scale was only 10% of what they promised

ii) Quality of Lead was very poor

As a backup the brand manager did run campaign on their price point estimation and properties back calculated from CPM,CPC buys and were able to achieve the required numbers they had estimated easily with quality of lead 10X to what came in from agency.

This brings us to very important junction where what price to pay for what lead.  Quality of Lead matrix maintained by lot of brand managers showed on an average lead acquired at price points between INR 140-160 on an media plan have higher conversion ratio to sale. As lower price points you goto for acquiring leads lower the quality of leads. Unfortunately as this feedback to quality of leads is not feed back to the media property owners or ad networks they are not able to improve quality of same and are only able to optimize upto the level of acquistion of lead.

Recently lot of advertisers are promoting use of HTML banners instead of SWF creatives which experienced media planners in agencies are quoting to be saying the biggest source of such junk leads.

In such a scenario it will be very wrong to just blame the ad agencies but even the media owners and biggest of all media aggregators like networks which are not trying to get right feedback on right properties and not optimizing their inventories for quality of leads and continuing to accept campaigns at lower price points and find way to get leads at those price points instead of resolving end advertisers problems.

27 Responses to “Cost Per Lead Model Advertising – What price to pay for leads”


  1. 1 Vishal Verma October 16, 2008 at 11:54 am

    Hi,

    That’s all because media planners are treating Ad Network as lead generation machine only to fulfill the lead targets and compromising with the quality and focusing on quantity.

    When you go for Call Tracking for Campaign Longevity which shows that CPM is always better then CPL and you go for call tracking which will show you the better result and proves that how the CPM branding can help the advertiser to meet their expectation. But Agencies are targeting towards CPL generation, which leads the Ad Network to think on other ideas to sustain in the market.

    Besides that, Advertisers are always looking for branding and looking for ROI, but they need to understand that if ICICI and Relaince are doing the branding activities. On the other hand, if agencies are going to target Ad Network as Lead Genration Machine then Ad Network can approach comparatively brands. Able to sell leads to them at cheaper rate and can generate more money but at point of time Branding going to be in the doom and leading the Ad Networks industry to lead generating machine and if this going to happen in future continuously then Advertisement for branding have no meaning.

    Regards

    Vishal Verma

    http://online-advertising-network.blogspot.com/2008/09/cpm-better-then-cpl-campaignlongevity.html

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