CPC vs. CPA advertising: which provides a better return on investment?

[mandy]

Internet advertising pricing models: cost-per-click (CPC) or cost-per-action (CPA)? ...

Let's look at pricing first. CPC pricing allows companies of all sizes, with budgets both large and small, to benefit from cost-effective, results-driven online advertising. With a low minimum price point, advertisers using CPC engines tend to be able to afford to bid on both targeted keywords and generic terms. These targeted terms are referred to as the keyword long tail or the long tail of the search term curve. They're the "cheap flights to Morocco at Christmas" keyword string that, due to less volume and often lower competition, commands a lower CPC price than the keyword "flight" which is more generic and costly.

CPC also tends to work well across a wide range of marketing objectives as it can provide great exposure online-- driving audience, increasing sales and growing new registrations. So does CPA. But, if your main objective is to drive audience, CPC ad buys would appear to be the better route to go. With CPA pricing, the use of promotions and incentives, such as "buy one, get one free" becomes increasingly important to drive uptake. Promotions work excellent for CPC too but are not as crucial...

full article: http://imediaconnection.com/content/12282.asp

[BellisimaJ.]

TY, Mandy.


I found the article a little hard to follow, but found the following points relevant to my own interest:

1. CPC are less costlly and can be very effective, in driving "audience"---possibly all that you need for a content-driven site.
2. CPA is more costly and promotions become more important. This is probably not needed for a content-driven site.

The author didn't really tell us which choice offers the higher ROI unless I missed that.(Half-asleep, so very possible.   )

I assume that, if you can afford it, CPA would offer a higher ROI? Anyone know or care to speculate?