“CPA,” “CPM,” “Customer Acquisition,” “Lead gen,” “CPC” – let’s get it right

We’re looking forward to the next purchase here by Google as AOL and Microsoft seem to be commanding the press….

In the meantime, we are consistently amazed at how folks interchange pricing models and marketing models with little regard to understanding that pricing models (CPM, CPC, CPA) and marketing models (“customer acquisition,” “lead generation,” “classifieds/listings” etc.) are not synonymous.

So here are some definition to help:

CPC, CPM, CPA: We’ll spare you the standard definition and merely talk about a few subtleties here. These are:

– For performance marketers, these pricing mechanisms are all ways merely to associate risk

– For brand marketers, the CPM mechanism is typically to associate brand exposure/awareness by reach, frequency and a set of unique users. If a brand marketer is talking about CPC or CPA, these are hopefully merely byproducts of the traffic they have bought, but not a direct measurement (to often brand marketers use a CPC price to indicate the success of a brand marketing campaign, please not this is *directly* inverse from the correct measurement)

In terms of marketing mechanisms:

“Lead Gen,” “Customer Acquisition” and even “CPA” are commonly bantered around as one in the same. This obviously could not be further from the truth.

CPA is a pricing model, so we can rule that one out.

Customer acquisition is, by definition, acquiring a customer for a client, advertiser. This is usually a marketing mechanism that involves a “hard” offer (one where a user much input their credit card) to “sign-up” for a service that they will receive upon completion of their user session that just produced the customer acquisition. This is “customer acquisition.”

Lead generation is, by definition, acquiring a “potential” customer for a client or advertiser. This is usually a marketing mechanism that involves “sorting” or “routing” profiles by certain factors or attributes to a certain client or advertiser.  For example, LendingTree “acquires” a potential customer and then based on factors like state and credit score, routes this customer to the correct bank or lender.

Classifieds or listings is a bit vague and if we’ve erred in our definition here please help us correct it. Classifieds involves pre-sorting a user based upon the user’s preferences for their selection of becoming a lead or acquired customer for a client or brand. Common companies that employ this type of methodology are comparison shopping sites and eBay for example.

Now of course, there are hybrids of all these models or layered models of these marketing models. For example, a travel site like Expedia has a “classifieds” layer over a “customer acquisition” model.

A user presorts themself through a series of filters and then Expedia itself “books” or “acquires” that customer for someone like a Hilton Hotel. Most would say that this is merely just the classifieds model, but the securing a customer is “customer acquisition,” right?

Please let us know if you take umbrage with these definitions. Or if we have missed succinct ones comment or drop us a line.


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