What Do P4P, CPM, CPC, CPL, and CPA Mean?
Ever want to enjoy a good burger and beer with a good friend? Invite Paul DeBettignies a/k/a Minnesota Headhunter out and then the conversation flow like water on a table — all over the place.
Paul and I shared some good laughs, tips, and tricks a couple of months back during the deepest, darkest days of the Minnesota winter and one of his comments really stuck with me. Well, many of them did but this blog article is about only one of them.
Paul noted that many corporate and third party recruiters don’t buy pay-for-performance advertising because they don’t understand the terminology. Some don’t understand what pay-for-performance means let alone any of the acronyms that tend to go along with it. So today, folks, I’m going to give you the 30 second tour:
- P4P (pay for performance) – The newspaper, magazine, broadcaster, or web site that publishes your ad gets paid by you (the advertiser) only if the ad works. How do you know if the ad works? The responses to the ad need to be tracked. That tends to be done by the client in such a way that people who respond to the ad either self-identify themselves (“I saw your ad on CollegeRecruiter.com!”) or, better yet, software automatically identifies the person who signs up at your web site as having come from the ad that you purchased from us.
- CPM (cost per thousand impressions) – If you thought M stood for millions then you weren’t listening in school when they taught Roman numerals. CPM advertising is the traditional way of buying advertising. It stands to reason that if you buy an ad in a newspaper with a circulation of 600,000 that it will cost you more than an ad in a comparable newspaper that has a circulation of only 300,000, right? That’s because you’re paying more to the first because you’re getting more impressions or people looking at your ad. Job boards like CollegeRecruiter.com, Monster, Careerbuilder, Dice, etc. have typically sold most of their ads on a CPM basis. Want to buy 100,000 banner ads? That’s $800 on our site, which is $8. Want to buy a job posting? That’s $175. Oh. But that’s not per thousand, you say. Well, it sort of is because sites like Monster will drive a lot more candidates to your job posting ads so they can charge more than niche sites like CollegeRecruiter.com. So traditional job posting buys are like traditional newspaper ad buys in that the more people who look at an ad, the more the advertiser can charge for it.
- CPC (cost per click) – Better than paying for eyeballs is paying for responses and the easiest response to measure is a click. For each person who clicks from the publisher’s site to yours, you pay them . That amount is your cost per click. Sites like Indeed, SimplyHired, TopUSAJobs, JuJu, and other pay per click job search engines will sell you clicks for about $0.10 to $0.25. The more you buy, the lower your price. Sites like Yahoo, Bing, and Google will typically charge you more per click but you’ll reach a more passive job seeking audience. If that’s important to you, the extra cost may be worthwhile.
- CPL (cost per lead) or PPA (pay per applicant) – Wouldn’t you rather pay for qualified leads or job applicants than just a bunch of people looking at your ad or a bunch of clicks to your web site? Anything that brings your purchase closer to the point of sale for consumer marketers or hire for employment marketers is a good idea because it shifts the risk of the ad not performing to the publisher. If the ad works well, you do well and so does the publisher. If the ad does poorly, they share your pain. How much should you pay per lead or per applicant? It depends upon how many you want to buy as the more you buy the more economies of scale kick in to lower the publisher’s cost and it also depends upon how hard it is for the publisher to get those people to express interest as the harder it is the fewer leads / applications they’ll generate so the more they’ll need to charge. Employers buying pay per applicant job postings from us typically pay $10 to $20.
- CPA (cost per acquisition) – Often referred to as cost per sale for consumer marketers or cost per hire for employment marketers, CPA ad buys are the Holy Grail for advertisers as they shift the entire risk of their ad campaign failing to the publisher. If the ad results in no sales or hires, there’s no cost. On the employment side, these deals are basically taking business away from Paul and other headhunters as they’ve traditionally been paid a success fee based upon how hard it is find a candidate who will get a job offer from the employer client and accept that offer. Candidates who are paid more tend to be harder to find so the greater the compensation, the more third party recruiters are generally paid. Job boards rarely sell CPA advertising to corporate recruiters, third party recruiters, or any other employment marketers because few really know where their hires are coming from. If they track at all, they typically rely heavily or even exclusively on candidates to self-identify their source of hire and 83 percent of candidates misidentify their source.
Which option is the best? It depends. We love all kinds of P4P advertising because it aligns our interests with those of our clients. If we do our job and the client is successful, then they gladly pay our bill and come back to us for more. Yes, we incur more risk and sometimes those don’t work out well, but we’d prefer to focus our energies and other resources on serving those clients for whom we can help than those clients who are beyond our help.
