Advantage and Disadvantage of CPO/CPL Metric Model

CPO = Cost Per Order

CPO is the total cost of your marketing campaign divided by the number of orders received for the campaign. The CPO is used to determine the cost spent to acquire a customer.

CPL = Cost Per Lead

Cost per lead, often abbreviated as CPL, is an online advertising pricing model, where the advertiser pays for an explicit sign-up from a consumer interested in the advertiser's offer. It is also commonly called online lead generation.

Ø  Benefits of CPO / CPL for Advertiser:

1.     It is preferred model of the advertiser as zero risk on this side.

2.   The major benefits the advertiser have is that they can exactly how much to pay per defined action. So if an advertiser knows that a new customer in the section means $50 which is the profit of $10, they can calculate and easily pay equally high CPC / CPL. The cost per lead is generally calculated by percentage of profit which varies from 2 to 10% but provides like Amazon have a percentage of revenue share as CPO / CPL, sometimes combined with an absolute maximum limits, for example: From a value of $250 upwards the publisher receives an overall 10€, no matter whether the transactions is $250 or $250,000.

3.     The Banner will be shown for unlimited period of the time as no connection with clicks an impression.

4.      Low risk of fraud.

Ø  Disadvantage of the CPO / CPL for Advertiser:

1.    Not much or any major disadvantage but yes if suddenly the calculated revenue per user decreases sharply because of added other buyers or leads to different season, then also the CPO / CPL model can have a negative impact. Therefore, one should have the daily average shopping carts and the return rate in the eye and adjust the CPO / CPL process.

2.    One another disadvantage could be that it is difficult to find publishers who wants to switch CPO / CPL campaigns.

Ø  Benefits of CPO / CPL for Publishers:

1.      Even if the banners are clicked rate, the remuneration can compensate with very high CPO / CPL which again and lead to a good revenue ratio per page impression.

2.       Cost per lead or order is much higher than CPM or CPC.

Ø  Disadvantage of CPO / CPL for Publisher:

1.    Dependable on conversion tracking technology and measurement, any miss on that can lead to miss of a conversion so can a loss for publisher.

2.      The cookie problem which is quite major.

3.       Hard for the publisher to estimate when to stop a campaign.