Price Per Action Gaining Favor Among Web Advertisers

Direct-response pricing models such as pay-per-lead and pay-per-action are gaining in acceptance and use, according to an industry newsletter.

In fact, some experienced Web marketers believe that pay-per-action–based on the viewer taking a specific step after reading a banner–will at least equal the popularity of CPM as a pricing model in 1998, according to Simba Information Inc.’s “Electronic Advertising & Marketplace Report” newsletter.

“This model will absolutely dominate the market in the next 12 months,” Kelly Freeman, VP of business development with DoubleClick Direct, was quoted as saying.

Insurance company Garden State Life, for one, after experimenting with a CPM ad model in past campaigns, developed a Web effort with ad agency Synapse Group in Dallas that paid by lead, rather than by impression.

The campaign used banners on sites such as Insurance News Network and GolfWeb that linked to microsites that provide information and pricing on Garden State insurance policies.

Garden State president Scott Luchesi said it outperformed any other banner campaign the company has run. The company paid in the range of $10 per lead, defined as viewers that completed at least seven of the demographic questions asked at the microsites.

When DoubleClick Direct was first announced last year, it only offered per- action pricing for unsold inventory across the DoubleClick Network, thereby reducing the risk for participating publishers. Today, DoubleClick Direct is a separate program with more than 60 participating sites, including AltaVista and AdOne Classified Network, offering per-action pricing across all inventory, the newsletter said. There are currently 80 advertisers running 150 campaigns through the program.

DoubleClick Direct offers pricing per-click, per-lead, per-sale and per- download. Pricing varies dramatically by the product being offered, according to Freeman. Financial offers yield up to $50 per lead, while magazine- subscription offers average $15 per lead.

DoubleClick Direct turns down campaigns targeted to small, niche audiences, and requires that all programs have some mass appeal, according to the newsletter.

PointCast Direct, which launched on the heels of DoubleClick Direct last year, is only offered on a cost-per-click model rather than per-lead, but has sold out every month since launch, according to Dan Albert, vice president of strategic sales. It currently features 30 advertisers.

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