As advertisers tighten their belts in a down economy, business is booming in the performance media space.
Financial analysts like J.P. Morgan predict that in 2009 “performance-driven advertising should continue to rise.” As more ad inventory becomes available, publishers who once might have only accepted CPM (define) buys have suddenly become open to performance pricing models.
Those already in the performance space have seen a sharp influx of advertisers, even brand ones. As a media planner, this might change how you think and where you look for space. Consider the following factors as you go down this road.
Search Has Limitations
During the last recession, online advertising fell by 27 percent, but we saw search advertising take off because it was performance-driven based on CPC (define). Competition and keyword bid costs have increased now that search advertising is mainstream, but inventory will always be limited by the volume of search queries.
There Are Many Facets of Performance Media
Performance media is more complex than most people realize. Therefore, defining performance media in a singular way isn’t really appropriate.
Performance for a brand entity might just mean controlling the total cost of driving traffic to a site in predictable way, i.e., via CPC. An e-commerce entity looks to pay only upon a sale — in other words, cost per action (CPA).
Lead generation, also known as cost per lead (CPL), can be used for many purposes, including initiating a direct sales contact, feeding a database for ongoing re-marketing, or building community. Lead gen has broader appeal because it could apply to brand marketers as well as direct marketers, to products or services, to B2C (define) or B2B (define).
Performance advertising suits any advertiser — it’s just a matter of finding sources that appropriately match your needs.
Because performance media is complex, take some time to learn the ins and outs if you aren’t familiar with the space. Performance media has a shaky reputation for a reason: some players don’t abide by any rules or broker their offer through unscrupulous affiliates.
Avoid no-name CPA networks. Ask for transparency. Understand how many times your lead is being sold to other advertisers simultaneously. Lead gen marketplace Pontiflex, for example, not only provides a one-stop shop for lead sourcing and bidding, but the winning bidder is assured that its leads are unique.
Do the Math and Establish Benchmark Metrics
If you’re going to enter the world of performance advertising, establish buying thresholds. How you derive those numbers is equally important. This means that the advertiser has to take a closer look at the whole equation, perhaps back calculating from an actual sale, to figure out what it can afford per lead or per click.
This may sound easier than it is, particularly for advertisers who have never gone through this process or aren’t intimately familiar with the variables of their sales or action equation. I’ve had advertisers give me a CPA or CPL target and when I ask how they derived it, they’d say, “Well, that sounds like a good number.” That’s not a good reason.
Understand your entire conversion process and how many visitors turn into leads, leads turn into sales, how many times you need to call or e-mail a contact before a buy, the value of that sale, and if there’s recurring value to that customer, among other factors. If you don’t have the answers to these questions, it might be time to sharpen your pencil.
Creative Is Still Important
Just because you might only pay on an action doesn’t mean you want to skimp on the creative process. Creative might be even more important. In a CPA environment, if your creative and offer don’t convert, the publisher carrying your ad will quickly replace it with a different ad. You must also think of the multiple components of creative: there’s the visual part of the ad, the message (offer, call to action), and then, when appropriate, the landing page.
Monitor, Scrutinize, Optimize
Just getting performance isn’t good enough if it ultimately doesn’t benefit the advertiser (e.g., clicks, leads, or creative that don’t convert; CPA campaigns that don’t deliver). Don’t just track the front end — ask the advertiser to help close the loop, particularly with lead gen buys — by providing lead quality feedback.
Plan to perform and you’ll perform in your plan!
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