Posted in Marketing and Strategy Terms, Total Reads: 900
Definition: Cost Per Inquiry
Cost per Inquiry refers to the ratio of actual amount spend by an organization for promotions and advertisements and the number of actual inquiries made or generated. This is the standard unit of cost used in direct response marketing campaigns. This is one of the tools for accessing the effectiveness of any promotional campaign. The campaigns are deemed effective if the revenues generated exceeds the advertising costs or it breaks even.
This arrangement is linked to per- inquiry advertising where the advertisers are given an ad space and the advertisers are required to pay only when they realize the results. One inherent disadvantage of this type of advertising is that advertisers cannot choose to position their advertisements. Per-inquiry advertising is a good option for those companies which place a greater emphasis on the results achieved by their advertisements, and not the position or time of airing.
The ‘per inquiry’ advertising is also sometimes referred to as pay per lead, cost per lead or cost per action advertising.
Let us consider that 500 inquiries were generated by a mailing operation costing Rs 1000, the CPI would be Rs 2 (i.e. 1000/500).