Customer Acquisition: What Does It Cost And How Much Will You Earn for the Lifetime of that Customer?

Most affiliate programs today are tracking impressions, number of affiliates, and overall reach. Yet the real goal is to add value to other Web Sites so they won't be able to go on without working with you.

This is not a lofty goal, but one that takes time; in setting up an affiliate program, you are looking at a long term solution. Unfortunately, your management is fed quickie reports on advertising with little or no view of the long term.

Here's the partners ActiveMarketplace tries to empower with its affiliate program:

1. Revenue Partners (Affiliates) Provide Response Driven Space and Earn Commissions

2. Product Partners Pay For Advertising and Get Buyers

By merging strategic relationships with a state of the art technology that instantly, and effectively, merchandises a Web Site, ActiveMarketplace aims to do what few companies on the Internet are doing...making sales while minimizing advertising costs.

In today's Internet Market, three key benchmarks must be achieved:

1. CPC: Your Cost Per Customer can run anywhere from $50-$120, and more, on the Internet. Reduce that below $30 with performance driven advertising, including affiliate programs.

2. RPC -- Revenue Per Customer: Maintaining momentum and ongoing sales means knowing the value of your long term customer. What is the lifetime buying value of your customer? (Hopefully more than the $30 it cost you to get them!)

3. Customer acquisition is the ultimate Internet goal. What does it cost to get your customer, and how much revenue does that customer generate? Most Internet businesses do not measure these factors; those who do not will lose money...guaranteed.

It is simple. Launching your online initiative requires performance based advertising. Here's what you have to choose from:

A. CPM Advertising: CPM means cost per thousand impressions; if you buy 100,000 impressions at $1 CPM (don't laugh, this is what most folks end up getting), it costs $100 CPM. Extending your brand and value proposition, you pay big dollars to be in front of many viewers. The price is high and sales are often low. While extending your reputation, you also pay too much for space that can be negotiated for better performance.

B. Clickthrough: Pay for qualified leads for longer purchase decisions. Clickthrough marketing generates traffic to eventually convert into sales. Clickthroughs can run 5-10 cents for simple traffic to $5-$10 for qualified leads driven by forms and extensive information.

C. Revenue Sharing: The purpose of good advertising is to generate a sale; just buying banner ads limits your effectiveness. You can brand and decrease your advertising costs by mixing in a Revenue Share/CPM model that makes sense for both parties. Take dead ad space and make it perform with the right merchandising for the right products.

Define your cost per customer acquisition and apply it to the best avenues of advertising. In today's market, it is tough to go out to powerful Web Sites with a revenue share only approach. Merging revenue share with your ad buys will decrease the CPM dollars you spend, by transferring up to 75% of the normal cost to performance based advertising.

It is simple; you can cut your ad buying costs significantly and target paying 25% of the CPM rate. The rest should be based on performance of that ad within the network.

If you can get revenue share deals only, great, but the reality of the Internet market is a hybrid from of CPM and revenue sharing via affiliate programs. It is becoming the model of advertising buying on the Internet.

Quick Start Campaign for Customer Acquisition

ActiveMarketplace is able to get the most value out of CPM, ClickThrough, and Revenue Sharing by turning existing banner ad budgets to performance driven, e-commerce systems powered by affiliate programs.

ActiveMarketplace quickly tests products, banners, and overall Internet advertising for less than the price of a banner ad campaign. Here's how we do it:

1. Showcase a product to our network of resellers. Our affinity websites and ezines appeal to women, music lovers, book buyers, WebMasters, and apparel shoppers.

2. Establish margins that are workable for all parties. Less than 10% margins won't motivate your affiliates, so determine a few products that you can give higher margins on. Supply them with products they can move and mine the back end for the repeat buys per customer.

3. Take a portion of your banner budget to negotiate CPM advertising with engagement partners who will consider revenue share after a sellthrough rate has been proven.

4. Determine if product can be moved on the Internet through focused niche channels. Use media dollars to find 2-4 high profile niche sites that are developing a million page views per month.

5. Create ongoing relationships with Revenue Partners, while attempting to convert paid banner ads into revenue share for a long term campaign.

6. This is a focused, hard-hitting campaign designed to maximize reach while identifying new venues for ad placement with a combination of CPM deals and revenue share. We continually look for new channels of customers in areas which generate loyal, repeat visitors.

Notice that we refer to Affiliates as Revenue Partners; it is our goal to have them make sales. That is the chief purpose of ActiveMarketplace; often affiliate programs aim to generate sales off of other Web Sites one time. Repeat sales should be the target for both you and your affiliates.