CPM campaigns, display campaigns where the advertiser pays for ad impressions, can be very difficult to make work for the direct marketer. Why? Two reasons, CTR’s (Click- Through- Rates) can be very difficult to predict, and with most ad units, generate very high costs per click. The second reason CPM campaigns are difficult for direct marketers is because you don’t know how the clicks will convert to leads, and how well those leads will convert to sales.
In today’s market, almost all sites have some form of CPC working on them, Ad Sense, Industry Brains, Ad Sonar etc. These are all excellent ways to test a media source and see how well the clicks convert to leads, and whether those leads convert to sales. The good thing about testing sites this way is that your risk is limited. You will find out very quickly if your landing page is converting traffic from the site within a range that is reasonable for you.
For example, most sites will want at least a $5,000 minimum spend to test a CPM campaign. But in the case the test has a negative result; at what point do you know that it is a loser? If you are running a lead generation campaign with a target conversion on click of say 3%, you know if your are in the ball park after about 300 clicks. If after 300 clicks, your conversion to lead is below 1%, it is almost impossible that it will rise to 3%. You can buy 300 clicks for far less than $1,000 on most quality sites.
If you keep in mind that most direct response campaigns are losers, about 70% of tests will tank, limiting your losses on those losers is very important to keeping your overall ROI positive. Using the example above, if you test with a CPM campaign, you will know whether it works or not usually after $1,000 in spend, and the most likely scenario is that it will be negative. You are effectively throwing 4 grand to the wind.
Test with CPC campaigns, if they work, then roll out with text link heavy CPM campaigns, and email campaigns from the media sources lists. Starting out with site targeted CPC is the best way to find which sites work for you, and where you can really open up your budget and look for business development opportunities.
