ZERO DOLLAR MARKETING:
IS THERE SUCH A THING?

Budgets are tight and marketers are looking for deals everywhere. I’ve been approached by marketers looking for performance-based deals, such as CPA deals (cost per acquisition). Some are looking for leads but others want to garner actual sales on other web sites.

"It’s really a win-win proposition," a marketer for an investment newsletter," told me. "All these sites have to do is run our e-mail to their lists, put our ad in their newsletter and we’ll pay them half of every order that comes in. They make money, we make money, and you will too."

"Sarah, this is zero dollar marketing," he said to me. "We will pay out on a real sale but we’re not going to spend any money on marketing. We’ve gotten burned before."

The problem with this scenario is that this marketer needed lots of deals because each place he might find has a finite number of users. And to get these deals set up on the right sites takes hours of calling and deal making. There’s a cost for that too, I’m sure, and many companies are not adding it to the equation. That’s why this marketer was trying to recruit me to work on a CPA basis as well.

Next a web hosting company called me up for assistance and I proposed they go with an excellent co-registration program that would net out at fifty cents a name or a direct e-mail daily tips mailings with $5 CPM. This company eventually decided to go with affiliate networks that charge small registration fees to have ads run on myriads of unknown sites of dubious quality. Since web hosting has such general appeal this company’s target "was anybody using a computer." They weren’t concerned where the ad ran.

"We only have to give them 30 – 50% of our sales," the young and green marketing manager said to me, proud to have found a low-cost solution.

"And that’s all you’re doing?" I asked him. "That’s going to be a really expensive proposition over the long term," I went on. "From the click to conversion numbers you sent me it looks like you could do much better with low-priced paid advertising. An order could cost you $16 with paid placement and with this CPA program you’re going to give away $33 for every $99 order you get."

"What can I say," the web hosting manager said, "my CEO isn’t really into spending any money."

Some consumer publishers I’ve heard say that offering a CPA deal suggests to mailers that an email list is "on life support" and is not generating sufficient response. CPA deals can also create accounting nightmares, and only trustworthy mailers should be offered such deals.

With all that said, if you are looking for CPA deals with sales as your goal–here are a few guidelines for you:

Before starting a campaign consult with an experienced peer, vendor or ad agency.

Test the medium with a small campaign just as you would do with any other

Determining whether there's real potential for gain in partnering with a specific site can be tricky.

Traffic volumes are important. If a site has 100,000 visitors a month, you’d need to get orders from .1% of site’s traffic to get 100 orders and then you’d be splitting that with your partner.

If you experience a high conversion rate you might find that a CPA program is really costing you too much. You also want to let some time pass to see if there are excessive chargebacks or cancellations from a partner site’s users.

Don’t let one test be the only indicator of success or failure. Your offer may not have worked initially but with some adjustments you may find you can improve performance.

You may need to test both a soft offer and a hard offer at different times on the same site and adjust the marketing program based on the results.

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Sixty-five percent of marketing executives say they use email for generating leads. Other uses include sending out information, customer retention and building awareness (55 percent each), generating immediate sales (53 percent) and upselling (51 percent).