Performance advertising is a new online marketing strategy based on an innovative pay-for-performance model. For business-to-business (B2B) and technology marketers who are focused on lead generation and demand creation, this strategy exceeds the capabilities of traditional space advertising models.
- 1. Performance Advertising HOW BUSINESS-TO-BUSINESS MARKETERSCAN BENEFIT FROM A NEWPAY-FOR-PERFORMANCE STRATEGYTW NETWORKS
2. PERFORMANCE ADVERTISING 1 In brief Performance advertising is a new online marketing strategy based on an innovative pay-for-performance model. For business-to-business (B2B) and technology marketers who are focused on lead generation and demand creation, this strategy exceeds the capabilities of traditional space advertising models. Key benefits are minimal risk, payment only upon performance, real-time results with highly qualified leads, and measurable response. 3. PERFORMANCE ADVERTISING2 Seeking an attractive alternative to traditional advertising For decades, the most visible component of message delivery for most B2B and technology marketers has been space advertising first in print, and in recent years also online. Marketers pay publishers of trade magazines, technical journals, and Web sites or portals to run ads in their space.This model still represents a successful part of the marketing mix for advertisers desiring brand building. However, space advertising has become ineffective for successful lead generation. It requires advertisers to pay well in advance for results.Yet marketers receive few responses to these ads, often discover many of the responses they do receive to be of low quality, and find it difficult to calculate their return on investment (ROI).In this era of increasingly scarce resources, many marketers and their management teams demand more.They require quantitative measurements of predictable returns on their marketing investment.They want more and better-qualified leads.They demand a new form of advertising that can cut their risk and ensure profits through sales growth. Introducing performance advertising In performance advertising, a marketer runs advertising content on a publishers Web site or portal under an innovative new model.In this model, the marketer relinquishes control of ad location and frequency to the publisher. In return, the publisher agrees to forego payment in advance. Instead, the advertiser pays only after a validated lead or other action of value such as a click, a download, or a registration by a prospect who meets agreed-upon quality criteria is generated.In other words, payment comes only upon proven performance. Performance advertising changes the whole dynamic of online advertising. Instead of purchasing space based upon desired locations and ad frequency, then hoping for results marketers can now just buy actual results.This new strategy is highly measurable. Performance advertising provides marketers with insights that surpass traditional Web metrics such as page views and click-through rates.A performance advertising model instead allows such measurements as qualified lead generation and prospect conversion rates.These permit marketers to perform real-time campaign customization and more accurate calculation of ROI.True results-based performance advertising (also called performance marketing or affiliate marketing) is new to the B2B space.Yet its revolutionary potential has been demonstrated in another, even larger, arena. 4. PERFORMANCE ADVERTISING3 Its already a proven success in online consumer and retail marketing for companies such as Amazon, eBay, Staples, Marriott, and Target. In fact, its currently a $6 billion channel to market with a 13% annual growth rate.Performance advertising now is proving to be a natural fit for B2B and technology marketers as well.As in the consumer realm, B2B advertisers have products and services they wish to sell on the Internet, and new customers they wish to access. Publishers have advertising space on their online sites for which they seek new advertisers. Performance marketing brings them together. It can forge a mutually beneficial relationship based on this new pay-for-performance model.Benefits and resultsHow Performance Advertising PerformsThis new results-based strategy is already proving an effective way for B2B marketers to maximize the value of their onlineCase 1: Introducingadvertising dollars, while eliminating hazards associated withIndustrial TechnologyOn a tight budget, an industrial supplier traditional pay-for-play advertising.needed a hard-hitting introduction for itslatest technology.The companys marketerschose a 60-day performance advertising Several key benefits have become apparent: campaign. Online ads carried by two Webpublishers offered a free white paper Low or no risk. As one practitioner put it succinctly,Withexplaining how the technology could be performance advertising, marketers can stop buying eyeballs applied in the target market. and start buying actions. This strategy eliminates the risk of spending large sums to purchase impressions that may or mayResults> Impressions62,871> Click-throughs 2,084 not translate into prospect interest, let alone prospect action> Qualified leads289 or actual customer sales.> Cost per lead$60> Lead conversion rate 14% Advertisers can be sure a performance advertising lead is an > Total cost $17,340interested prospect. Because that prospect has already expressed Performance advertising generated strong interest through an action such as downloading a white paper brand recognition, excellent lead qualityand qualification, and numerous quotations or registering for a Webinar. If the advertiser has designed thatupon sales follow-up. action properly, the action itself draws the prospect well down the path toward becoming a paying customer.The marketers budget is never at risk. If a given message doesnt reach or resonate with an interested audience, and no actions result, the advertiser simply doesnt pay for it. Instead, the marketer can devote his or her funds to running another message or trying another publisher.Payment only upon performance. Here is where performance advertising most directly meets modern marketers and managements demands for maximum cost-effectiveness.Publishers have become highly creative in offering advertisers performance-based products.These have included Webinars or seminars with pay-per-registration agreements, videos with pay-per-view arrangements, e-newsletter sponsorships, and e-mail blasts.Advertisers who purchase participation in products like these agree with the publisher beforehand on what parameters will constitute a qualified lead.As a campaign runs and site visitors begin to take actions 5. PERFORMANCE ADVERTISING 4 that tentatively identify them as leads, their information is instantly compared against given lead parameters. Nonvalid leads are weeded out, and advertisers are not charged for them.Advertisers pay only for proven performance and real results.Thats why proponents declare that performance advertising takes advertiser ROI to a whole new level.Real-time results. Unlike print-based media, performance advertising generates leads in real time. Demand can be created for a product or service almost immediately.Example: in less than 2 weeks, one life sciences software firm acquired almost 100 qualified leads through a single performance-based ad placed on one Web site.Measurable response. Since performance advertising is conducted online, its possible to measure almost everything How Performance Advertising Performsabout it, as it occurs.For instance, whether or not a given lead meets preset criteria Case 2: Capturingfor validity can be determined immediately not weeks or Life Sciences Leads A life sciences company decided to test months after a media placement. In addition, the advertiser performance advertising to support its lead generation program.A 30-day knows what ad and publisher generated the lead, and whatcampaign run with one Web publisher incentive the lead responded to.offered a free scientific paper on FDA compliance for a specific type of laboratory testing.The companys marketers accepted A well-designed performance advertising measurement systemonly North American leads. can efficiently capture full prospect data and provide comprehensive metrics on campaign performance. It can alsoResults > Impressions 12,029 share this data with the advertisers customer relationship > Click-throughs409 management (CRM) database. Precise CRM data will be vital > Qualified leads 68 > Cost per lead $60 for future marketing campaigns, as well as for increasingly > Lead conversion rate17% valuable lead nurturing efforts.> Total cost$4,080Performance advertising achieved a cost As one industrial advertiser said,I was amazed that each per lead significantly lower than the morning, a number of leads were deposited with full prospectcompanys traditional advertising program. data in my CRM database, ready for immediate follow-up. The marketers determined to mainstream this strategy for future lead generation. The leads were extremely high-quality and produced many quotations.This immediacy and wide prospect information bandwidth make it easier for advertisers to justify a given marketing expenditure.Tracking and reporting Ensuring that the predetermined criteria for lead qualification are met and performing subsequent campaign analyses are important components of any successful performance advertising campaign.B2B publishers offering this strategy must employ full-fledged performance marketing infrastructures, such as TW Solutions LinkShadowTM system, to perform these functions.The infrastructure monitors and logs visitor activities, tracking actions such as click-throughs and conversions. It provides Web landing pages and registration forms that interface seamlessly with the 6. PERFORMANCE ADVERTISING5 advertisers Web site. It captures full prospect data (minimally name, job title, organization, phone, and e-mail), answers to lead qualification questions, and survey responses in real time to populate lead and CRM databases, while also closely tracking costs all across multiple campaigns and Web sites.Advertisers