Page 202 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Sales and Promotions Management

Notes 5. Cost per Action (CPA): It is also known as Cost per Acquisition. In this payment scheme,
the publisher takes all the risk of running the ad, and the advertiser pays only for the
amount of users who complete a transaction, such as a purchase or sign-up. This is the best
type of rate to pay for banner advertisements and the worst type of rate to charge.
6. Cost per Lead: This advertising is identical to CPA advertising and is based on the user
completing a form, registering for a newsletter or some other action that the merchant
feels will lead to a sale.

7. Cost per Order (CPO): In this, the revenue of advertising is based on each time an order is
transacted.
8. Cost per Engagement (CPE): It is a form of Cost per Action pricing first introduced in
March 2008. Differing from cost-per-impression or cost-per-click models, a CPE model
means advertising impressions are free and advertisers pay only when a user engages
with their specific ad unit. Engagement is defined as a user interacting with an ad in any
number of ways.

9. Cost per Conversion: It describes the cost of acquiring a customer, typically calculated by
dividing the total cost of an ad campaign by the number of conversions. The definition of
"Conversion" varies depending on the situation: it is sometimes considered to be a lead, a
sale, or a purchase.

Task You must have noticed some of the billboards in your city. Which three can
you recall? What did you find particularly noticeable?

Case Study Future Group Goes Digital in a Big Way

ishore Biyani's Future Group will launch a slew of digital commerce initiatives in
the next few weeks as India's largest retailer moves to sell a wide range of products
Kfrom bedspreads to treadmills through the Internet, mobile phones, television
and dedicated kiosks. "We were not satisfied with our digital presence, and now we have
decided to enter that space in a big way," said Kishore Biyani, CEO of the 9,000 crore
group.

While the group's online retail arm, Future E-commerce, already operates an e-commerce
portal, it will launch new initiatives such as SMS short codes, tele-shopping, proximity
marketing through mobile phones and virtual shopping through manned kiosks in the
coming weeks. "Most people in urban areas spend 8 to 10 hours in a day on one of the four
screens we are targeting. This translates into huge sales potential," said Mr Biyani.
The initiative will make Future Group one of the first modern retailers to move into
digital commerce in a big way. It will compete with portals such as eBay.com,
Indiatimes.com and Rediff.com, as well as with websites of Shoppers Stop and Landmark,
on the Internet. E-retailing is yet to take off in a big way in India and it's not at all
comparable with mature markets. The size of online retailing in India is estimated at
about 500 crore a year and that of teleshopping is estimated at 900 crore. That makes a
total of just over $300 million. In comparison, a recession-hit US recorded $131 billion
retail e-commerce in 2009, according to Emarketer.com. Mr Biyani hopes to change that
with his new initiative.
Contd...

196 LOVELY PROFESSIONAL UNIVERSITY