Cost Per Action TV

Sometimes called “cost per lead”, this is truly performance based TV advertising.

The way it works is you agree with the media company what constitutes a response (e.g. a phone call, a visit to a web page, or the filling in of an email optin form), and then agree a fee you’ll pay for each response. Alternatively, you can agree a fixed-fee and they’ll run the ad as many times as they need to until they’ve hit the number of leads you’ve agreed on.

And then they’ll run your ad and charge you for every response you get, or count the leads, depending on which model you’ve gone for.

This is an excellent way to do TV advertising if you can find a firm or station who’ll do it because it’s then in their interest to help you create TV ads that really do work.

This is very different from the usual way of doing it, where you’re paying for time and “creative” services. If you get into that scenario, you risk being oversold unnecessary services and add-ons, in exactly the same way as advertising reps in the print media will oversell you on space, colour and design.

How much should you pay for each lead?

Obviously you want to pay as little as you can get away with, but in many respects you want to be prepared to pay as much as you need to.

But remember the real profits in most businesses are in the long term relationships with customers. The costs of Marketing to new customers are very high. The costs of Marketing to existing customers are very low – with the internet and email, close to nothing.

Most business owners convert a lead to make a sale; I prefer to think of it as converting a lead to get a customer. People who have bought from you before presumably had a good experience with you and like and trust you; this means they’re likely to buy from you again.

One of the easiest ways to increase you profits with almost no extra work is simply to ask your existing customers what they need and what they want and then give it to them.

Once you’ve done this you can put a system in place that automatically offers all new customers these other products and services — presto! An instant cash-flow boost for no work.

So you simply must build up a “back end” of products or services to offer your customers.

If you do not have anything obvious to offer them, find someone who does, team up with them and offer their stuff to your customers.