How CPA Deals Can Wreck Your Brand

Jane Kaiser is extremely wary of cost-per-action e-mail deals.

CPA arrangements — where merchants pay affiliates for each sale or action they generate — are one of the quickest ways to trash a brand online and destroy the merchant's ability to sell by e-mail, even to its house file, according to Kaiser, the president of New York online consultancy Eclipse Direct Marketing.

“It's not that CPA deals are bad, it's that the marketer should proceed with extreme caution,” she says.

The reason: Unless they're managed properly, these agreements provide incentives for affiliates to repeatedly blast every address they can get their hands on with the offer.

“Marketers want CPA deals because they don't want to risk putting dollars toward something they don't know is going to work,” she adds. “So they decide to pay a bounty for every member, or order, or whatever they're looking to accomplish.”

The problem with this setup in e-mail, according to Kaiser, is the only way the list provider makes money is by getting people to convert.

“Many [CPA affiliates] aren't spammers. They're Can Spam compliant, they abide by the rules, they use suppression files and do everything they're supposed to do within the letter of the law,” she says. “Unfortunately, ISPs have a different law.”

User complaints are the No. 1 criteria Internet service providers use to determine if incoming e-mail is spam. But simply sending too much e-mail can get the sender flagged as a spammer. “Anyone can look like a spammer [to an ISP] if they flood the Internet with e-mail, and looking like a spammer is just as bad as being one,” Kaiser says.

Moreover, not only will the ISP flag the address sending the mail, it will flag the mail's content and treat any e-mail that contains it as spam. As a result, the marketer whose offer has been flagged as spam may be blocked from reaching its own customers.

“Now, e-mail to their house file — their bread, their gold, the people they want to retain — is either being blocked or going to the bulk folder,” Kaiser says. “[Marketers] are not only hurting their [online] acquisition efforts, they're severely affecting their e-mail house file, and that's the biggest problem with CPA deals.”

For example, she continues, some executives that launched an unnamed continuity club thought they could drive sales through affiliates and found out the hard way how dangerous those arrangements can be. “They ended up on every major blacklist within three months because of the way they were marketing. And they weren't spamming.

“They were using sources that were high volume. They weren't doing anything illegal, but they weren't complying with the ISPs' rules.”

So is e-mail acquisition worth the hassle? Absolutely, according to Kaiser.

“I've been using e-mail successfully as an acquisition tool for six years. People who buy on the Internet might not be the same profile as someone who buys from your catalog, which means if you're not speaking to people online you're leaving money on the table.”

She notes as well that the average online order is usually at least 25% larger than one offline because the Internet makes it so easy to add to a purchase.

Kaiser advises marketers not to necessarily avoid CPA deals. The trick is to remove the incentive for affiliates to flood the Internet with offers.

“There's a place for CPA, but it needs to be monitored,” she says. One possibility is to pay affiliates on a cost-per-lead basis for soft offers, but limit the number of leads the marketer will buy from the affiliate per month.

“This way you're limiting your risk. If the leads don't convert, you haven't risked too much.”