‘The juice is not always worth the squeeze’: Publishers evaluate cost-per-click pricing models in their commerce businesses

By Kayleigh Barber

The first quarter of 2022 wasn’t the most successful for some publishers’ commerce businesses. But a few media companies are hoping to avoid this downward trajectory with new pricing models for affiliate deals. Execs hope this strategy will to bring in more retail partners and take advantage of their audiences’ changing online shopping habits.

Called cost-per-click (CPC), this pricing model awards a publisher a small fee from a retailer based on the amount of traffic it refers to the brand’s website or product page, regardless of whether that reader actually made a purchase. This, on average, earns a publisher less revenue than they would get from a more traditional affiliate commerce model, like cost-per-acquisition (CPA), where the publisher earns a commission on any purchases made from the links in its coverage. A CPC deal earns publishers on average $3,000 to $5,000, according to several execs.

But attracting new retail brands makes up for any potential revenue loss, according to execs with Vice Media Group and Leaf Group’s Hunker, which are each experimenting with the CPC model. It also gives publishers new insights, including which emerging trends and products consumers are interested in before they reach the point of purchase. Not all commerce sites, like The New York Times’ Wirecutter, however, are convinced. The Times’ team has opted for a CPA model, with leadership believing that a CPC model requires too much work from its team because of how involved direct deals with retailers can be.

Weighing the cost

When Wirecutter tested CPC pricing, each deal on average earned about $3,000 to $5,000, according to Leilani Han, the brand’s executive director of commerce, a range that was enough to put the nail in that strategy’s coffin. Han did not disclose what an average CPA deal earns for the company, but they tend to be much higher, depending on the commission rates and the prices of the products from each retailer.

“The workflows that are involved with us actually setting up a new partner, and getting them onto the site and optimizing with them, there’s a fair amount of manual work involved. And so for us to be doing that with a brand that’s going to be on a smaller scale-side, we really have to look at what the opportunity cost is relative to our internal resourcing,” said Han. “The juice is not always worth the squeeze.”

Hunker on the other hand is in the early phase of testing CPC pricing, but only uses it when it’s run through the same affiliate management networks that CPA models operate on. That’s because of how easy it is to toggle between CPC and CPA pricing structures based on narrower factors like product or distribution channel, unlike a direct deal with a retailer, according to Eve Epstein, svp and gm of Hunker.

For example, platforms like social media tend to see more clicks from consumers and fewer conversions, so Epstein said it makes sense to test CPC pricing there, versus allowing CPC pricing across …read more

Source:: Digiday