Commission Junction Launches Performance-Based Ad Channel

Commission Junction is launching a new text-based advertising network using technology that places and ranks ads according to performance and bid price, without regard for context.

“Ads that rotate through our new network will automatically get greater play on the Web sites where customers are showing the greatest response. Since advertisers only pay for successful responses, it’s a no-risk proposition for locating previously undiscovered customers in unexpected places,” said Jeff Pullen, general manager of Commission Junction.

The new network, CJ Evolution, has 15 publishers so far. About 60 advertisers have been helping ValueClick-owned Commission Junction test the new approach, according to Pullen. The new network will be separate from CJ’s current affiliate network

The system is similar in some ways to Google’s AdWords, though AdWords places its ads based upon the content of the page, then ranks them using click-through and bid price. With CJ Evolution, advertisers decide if they want their ads ranked according to clickthrough, registration, leads, or sales. They can also boost the ads’ placement by increasing the cost they pay per-action, as is the case with AdWords.

An optimization engine, using proprietary CJ Evolution technology, runs the text ads on a number of sites to see where they do best. The ads will stay on the sites where they score the most actions. The engine will yank the ads from the sites where they are performing poorly and serve them elsewhere.

Though contextual relevance will figure into the equation for initial placement, ad placement will depend entirely on where the ads convert the best, according to John Ardis, VP of corporate strategy at ValueClick. “At first we will go out broad with our testing. We start running the ad in numerous different areas and then the optimization engine will take over and limit the exposure where it is not converting.”

The risk for advertisers is small, Pullen said. Since the advertisers pay per action, they don’t have to worry about losing money.

Also, since the ads are strictly text, little investment of time and labor is involved in creating them. So far, three formats are being tested: shorter ads; ads around the size of a typical AdWords ad; and a longer ad.

For the most part, so far, the company has purchased inventory from publishers on a CPM basis and resold it to advertisers. This may change in time, Pullen said.

“It shouldn’t be a risk for the publisher. I imagine it will be put in some fairly insignificant space that ‘s probably white space,” said Mark Redetzke, a partner at online retailer Second Act and a former media director. “Publishers are protective of their own environment.” Redetzke said, “It’s good to see publishers have another potential revenue stream.”

Redetzke predicted that the majority of advertisers using CJ Evolution would be retail-focused, commerce-driven sites such as Amazon, Best Buy or Sears. “Text links do tend to be more effective in direct response and conversions for these advertisers,” he said.

Redetzke said big advertisers have big budgets and testing funds available for checking out new approaches, so “I don’t see any significant challenges to getting people to test this out.”

Commission Junction has been busy this month. Earlier in May, the affiliate network launched an affiliate marketing program for America Online-owned Netscape.

ValueClick acquired Commission Junction in October 2003, eventually merging it with Be Free, ValueClick’s own affiliate network.

The combo, now know as Commission Junction, is one of the largest affiliate networks in business today. The company boasts America Online’s Netscape, Barnes & Noble and The Gap as advertisers.

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