A business hopes to generate large online sales through posting ads on social networking sites but only wants to pay when an ad actually generates a sale. That firm should use the performance measure of
A)cost per thousand, and pay 50 cents for every time an ad loads, up to $100 per month.
B)a negotiated measure, and pay $100 to post its ad for two weeks.
C)cost per click, and pay 50 cents for every visitor who clicks on the ad and goes to its website.
D)cost per action, and pay $50 for every purchase that originated from an ad on the site.
E)cost per like, and pay $1 for every unique visitor who likes the advertised product.

Question

Quizplus · Accepted Answer

The firm should use cost per action (CPA) as the performance measure and pay $50 for every purchase that originated from an ad on the site. CPA would ensure that the firm only pays for results, meaning that they would only pay when an ad generates a sale. Paying per click or like would not necessarily lead to sales and could result in wasted ad spend. Negotiated measures or cost per thousand impressions (CPM) also do not guarantee results and may not be as cost-effective as CPA.

A Business Hopes to Generate Large Online Sales Through Posting