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In The News2001

Getting the most out of your performance marketing efforts

Published by Refer-it, an internet.com company


By: Chris Kramer, COO and Co-Founder (6/21/01)
NETexponent

In an environment where market pressures continue to build and online marketing budgets face increased scrutiny, companies are now shifting gears and are now looking for tangible results from their precious online marketing dollars. Make no mistake, money is being spent on online advertising, but it is being spent wisely. Now that more money is being shifted to performance marketing, lets take a look at why it is more important than ever to devote resources to managing your performance marketing efforts.

According to the Forrester Research Report published in January of 2001 “Online Advertising Eclipsed”, already more than 62% of all money spent in online advertising is either performance based or is a hybrid of CPM and performance. That number is expected to jump to 83% in the next two years as marketers shift their dollars towards performance based deals. If marketers want to take advantage of this shift, they’ll need to have the tools necessary for making these deals work.

Performance marketing deals really are quite different than CPM deals since the tables are completely turned on who has the negotiating power and who has the delivery responsibilities. In the CPM world, the buyer has the negotiating power, and the responsibility is on the publisher to deliver the kind of results that make a marketer want to continue with the buy. In setting up performance marketing deals, the publishers take back a lot of that power and have the ability to pick and choose which performance deals they’re willing to accept. The responsibility of results is now shared with the marketer, as they must make sure they convert people at a high enough rate to make the publisher want to continue with the deal.

Since a great deal of the responsibility has now shifted back to the marketer to make these deals work, they need to watch these deals more closely than ever to make sure that it is performing well for the publishers. If a performance marketing deal doesn’t pay off for a publisher and they don’t see the expected results, they might be quick to drop that marketer and move on to another deal that converts for them and generates enough revenue to justify the investment in time and resources. A great deal of work goes into convincing sites to work on a performance basis, and if these deals are not managed properly all of that effort goes to waste.

There are three main elements that a marketer needs to keep in mind when managing a performance marketing deal. Step one is to establish realistic goals for the publisher. If they are expecting a certain amount of revenue or effective CPC or CPM, it’s important to know this up front in order to manage expectations and gauge results. If you have historical data on click and conversion rates, you can make a rough estimate on how much a publisher can make on your deal.

Once the expectations have been set and the deal has been implemented, the second key factor for success is to watch these campaigns closely. How is the creative performing? How many people are converting once they’ve clicked through, and is the publisher making what they expected to make? Examine the data every day, look for trends, and share this data with your publishers.

The last key element in effectively managing your performance deals is optimization. Take all of that learning you now have from examining the data and use it to optimize and improve your efforts. Remove creative that isn’t working, tell your publishers which days of the week perform the best, look at how specific placements are working, and share any other pieces of information that can help your publishers improve results.

There is still this common myth that performance deals don’t require as much attention as CPM deals. With the majority of the responsibility for results now on the marketer and not the publisher, it is imperative for marketers to set realistic goals, examine the data, and optimize in order to get the most out of your performance marketing efforts. Now that more money than ever before is being spent on performance marketing, it is crucial to devote the resources necessary to effectively manage your performance marketing efforts.

Chris has worked in the performance marketing space for more than two years and has worked on clients such as The New York Times and SelfCare.com. Chris has also spent more than 6 years in the offline world building teams for companies like Eddie Bauer and Disney Home Video. For comments or to contact Chris, you can email info@netexponent.com.