Pay-Per-Conversion

Name of the pattern:

Pay-Per-Conversion
Pay-Per-Acquisition
Pay-Per-Lead (special case)
Pay-Per-Sale (special case)
PPC
PPA

Summary:

Pay-Per-Conversion is the newest Internet advertising model, where an advertiser pays for a specific user action beyond the click, normally a sale (Pay-Per-Sale) or opting into the mailing list (Pay-Per-Lead).

Description:

To implement a Pay-Per-Conversion advertising network (like Goodgle AdWords) requires an advertiser to put special code into the “Thank you” page shown upon a successful conversion. When a prospect clicks on the ad, the advertising network puts a cookie into his browser cache, and when he reaches the “Thank you” page, it recognizes the prospect it sent to the advertiser, and counts the conversion.

The Pay-Per-Sale variation is essentially the same as enrolling the advertising network (like Google AdWords) into your affiliate program, with one notable exception: the advertising network is the one who defines affiliate commissions within the limits you set. Considering that advertising network and publisher costs are still expressed in impressions, if you have poor conversions the cost may be too high for you or the model will simply fail to work for you. If you set the limit too low, Google just won’t send you any traffic, because it does not pay out for them.

To apply this pattern you MUST know the average sale or profit you get per lead or per customer. Hence, preliminary testing is a must.

When to use this pattern:

When you have a business with a good conversion rate and a reasonable profit per lead to justify Pay-Per-Conversion costs. You should have that anyway.

Attribution:

Unknown. In pre-Internet era paying per sale was a common practice.

Related patterns:

Pay-per-Click, PPC, Pay-per-Impression, PPI

Related anti-patterns:

Comments:

Make sure you’ve optimized and tuned up the process to ensure you are making profit when using this method. Set the original limit low and work hard on improving all the conversions (Click-Through Rate, Opt-in rate, sale rate).

For example, if an average lead makes 0.7 purchases resulting in $10 commissions, setting the Pay-Per-Lead limit to $10 will be non-profit marketing for you. It’s better to test it with other traffic methods like Pay-Per-Click or SEO before using the PPL or PPS method. The cheaper the better, as long as the traffic is legitimate.