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When financial times get tough in small
business, it's important to ensure your marketing efforts are generating a
decent ROI (return on investment). This is where "pay for performance" (P4P)
online marketing is vital.
"Pay for Performance" marketing is, as the
name suggests, an approach where you only bare a cost for a particular
response or conversion. Performance based marketing ensures you get a return
on your marketing spend - assisting with your ROI goals.
So what types of Pay for Performance online
marketing are there?
Affiliate Marketing
Affiliate marketing is one of the original pay
for performance marketing strategies. With affiliate programs, you choose
your desired conversion (lead, sale of a product/service etc.) and the
rate/fee you wish to pay. It's then at the discretion of publishers whether
they promote your goods/services.
Affiliate Networks help to facilitate this by
providing a platform to promote your companies affiliate program and also
create a single place where publishers can find suitable advertisers.
They key to affiliate networks is getting the
balance right between offering an attractive commission to attract
publishers and not over-paying to the extent where you hurt your ROI.
Pay per Action Online Advertising
Several online advertising programs offer pay
for performance models. Many people believe that PPC (pay per click
advertising), such as Google AdWords or Yahoo! Search Marketing, are P4P
models, but given that the advertiser is responsible for conversion - this
is not entirely correct.
That said, search advertising and other pay
per click models do provide strong ROI possibilities for advertisers as you
are assured of traffic/visitors for your investment. If you're fairly
confident of conversion rates - then they can be a safe ROI advertising
choice.
Companies like Google have created hybrid
models which run off their traditional advertising platforms, but offer
affiliate style "pay per action" fee structures. While mass adoption is low
at this stage (Google's was a beta test), in tough financial times expect to
see more advertisers seeking these options.
Lead Generation Programs
Online lead generation models have become more
prevalent of late. Lead generation programs offer advertisers qualified
prospects for a set "per prospect" fee. The advertising provider carries the
burden of promoting the business, with fees only charged for a genuine
enquiry.
Like "pay per click" models - conversion of
leads is still the responsibility of business owners, but it removes a
substantial part of the advertising risk. The key is to ensure providers are
delivering quality leads which are the inherent problems with such programs.
P4P marketing such as those described above
goes against the traditional advertising methodology where clients pay for
creative or services with no assurance of results.
Pay for Performance online marketing, with its
real time tracking and accountability, has enabled advertisers to sure up
ROI and reduce promotional risks. This is especially important for small
businesses in tough financial times.
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