As you all know, Affiliate Marketing means you promote the supplier’s products and services to customers. When customers click on the link to buy products, register for services, make successful payments, you will receive % commission.
If the traditional methods that have been commonly used are CPS (Cost Per Sale) and CPA (Cost Per Action), then CPO will bring higher results for both referrers and sellers.
So what is a CPO? What is the calculation and how important is CPO in marketing? Let’s find out with Ola City through the following article.
1. What is CPO?
CPO (Cost Per Order) is defined as the cost for purchasing an order (regardless of whether the order is successful or not). The difference of CPO from CPS is that for CPS, when the order is completed (the seller has received the payment), you will be charged. In online marketing, CPO is a method of calculating all the costs incurred by the ordering process or when there is a potential customer.
CPO includes advertising fee, subscription fee as well as shipping fee. This method is used to determine the effectiveness of various forms of marketing and is often used in affiliate marketing or online advertising. The cost per order is also called the cost per sale or the cost per potential customer.
2. Is the CPO form difficult?
Is the form of CPO difficult? – The question that has been asked by many people. The answer is that it depends on the product/service you choose. CPO is suitable for industries, products and services that need consideration before buying, with high value such as: Functional foods, drugs … For industries such as: Electronic equipment, travel, household items, etc., it is compulsory to follow the form of CPS.
3. Formula to calculate CPO
Marketers need to capture cost metrics to determine the right campaign for their business. Only by understanding how to calculate the cost of each type of campaign can you build and align a strategy to save costs and bring the desired effect to your business.
- CPO is calculated as follows: CPO = Cost / Order Quantity.
When determining net income, the campaign budget portion is important for calculating usage fees per order. However, CPO is not used to determine net income in the business sense. The CPO method is a way of determining the effectiveness of affiliate marketing campaigns in relation to the portion of the budget used. The focus here is on the number of reactions that arise from a particular ad campaign.
4. How to use CPO?
CPO is the most commonly used method in the field of online advertising. When a text or image ad is displayed, it will attract a lot of attention. However, not all ads make an impression and attract a click or purchase. That is why CPO or other cost payment models are used. People often use CPO to measure the actual success of an advertising campaign.
Order cost is not only a measure of the value of money in affiliate marketing, it also affects the overall campaign, tracking and commission payment of the model. CPO is a connection of a fee and a provider paying for placing ads with other advertising partners. CPO will involve a fixed amount or percentage of sales calculated to be paid to partners.
5. The importance of CPO in online marketing
CPO is a calculation method based on actual sales. This is a great advantage for sellers. They can use a variety of advertising methods and only need to pay for the actual portion of sales received.
Publishers can take delivery and self-promote to potential customers, while you still receive a small amount of the company’s commission. CPO are also driven by profit margins: Companies selling expensive products will have a higher CPO value, while small stores will have a lower CPO value.
Most companies’ goal is to keep the CPO value as low as possible. The CPO model outperforms many other models, regardless of the actual value of the company’s other advertising campaigns. This depends on traffic, page impressions, and click-through rates, not necessarily on sales, even if these are important things from a search engine marketing standpoint.
Therefore, CPO is a low-value advertising cost risk reduction method and is especially important for small and medium-sized companies that only want to use a small amount of budget but want to advertise effectively.
Hopefully, the above article has helped you better understand the term CPO and its benefits and uses. Knowing the importance of CPO in online marketing and how to create a CPO campaign, you have had great success in increasing your profits.
Wish you more and more success in the future!
Ola City Global