They say that history repeats itself, and in the world of media, it seems to be doing just that. Economic recessions often bring about the need for more accountability and today's online marketers are shifting the emphasis away from media buying based on traditional cost per thousand (CPM) models towards more measurable performance based pricing models.
Ebiquity's 2009 Online Forecast, as referenced in Revolution magazine (January 2009), highlighted a greater focus on CPA (cost per acquisition) based marketing. And you only need to look back at other times of challenging economic conditions to see they have often driven advertisers to seek new channels that offer more measurable results from their marketing investment.
In the 1980s, data driven direct mail came to the forefront of the marketing agenda because it offered a much more targeted, response-driven approach than the mass mailing alternative. Similarly, the emergence of search in the 1990s was driven by measurability and performance, helping to give advertisers control over their return on investment. Today, it's the turn of online display advertising, with brands increasingly seeking not simply to deliver an online ad, but to deliver tangible results.
Advertisers also want to identify the link between opportunity and value. What they require is increased insight into what each advertising opportunity is worth to them. Developing buying strategies and payment models based on this approach is now easier due to emerging technologies.
However, whilst interest in performance-based advertising is high, brands are often still not making it work for them as well as it should. Too many limit their activity to a small number of sites, often because they struggle to identify their audience across the fragmented online environment, and lack in-depth knowledge of the performance opportunities available to them. However, they run the risk of potentially being marginalised if these sites attract low risk branded campaigns on a traditional CPM pricing basis.
To really deliver strong performance-based advertising, brands must look to target their audiences irrespective of the site they are on, as this helps maximise reach and drive a much more effective campaign. Traditionally, one of the most effective ways to do this was to work with a performance network, but increasingly ad exchanges are becoming important. Via ad exchanges, advertisers can easily define their target audience based on a wealth of criteria, including channel, offer type, geography, age and gender (where available) as well as the pricing model they are looking to buy on, be it flat CPM, CPC or CPA.
Some exchanges offer an auction-based solution for buying media, allowing an advertiser to easily tap into a wealth of available inventory. They create a bespoke market value for every impression, linking its price to its actual commercial value to the advertiser based on the advertiser's defined targeting criteria and ROI goals. This helps ensure that an advertiser doesn't overpay for an impression and also takes the concept of media buying way beyond the traditional approach of artificially defined pricing.
Additionally, some exchanges offer auto-optimisation for campaigns, using technology that learns where a creative performs well -- across different sites and sections and time of day. Based on performance, the system will focus on creatives that are generating the best return. The result is often campaigns which are effective much more quickly and which focus spend only where it is delivering the desired results. At the same time, advertisers can tweak campaigns to help further improve effectiveness. For example, they can adjust the pacing of campaigns to help ensure they do not burn up planned budget too quickly or put a delivery cap on the number of ads that are delivered per site to help ensure they achieve the best possible reach in relation to their spend.
The global nature of an exchange also means an advertiser can quickly expand its targeting horizons, embracing multi-national or international activity. Traditionally, going global has been a very time consuming move, as the overseas research and partner identification process can be slow and difficult. However, an exchange platform allows relevant partners to be easily identified and linked with.
An important final point to make regarding online performance advertising is the importance of a good creative. It's tempting for advertisers to focus on campaign set up. Often, too little effort goes into developing compelling and response-driven creative. Good creative means having a clear call to action, a landing page that meaningfully reflects the creative, consistency of look and feel and a user friendly registration path. Failing to consider these areas could result in campaigns that generate a reduced response or, even worse, campaigns that confuse or alienate potential customers.
In tough economic trading conditions performance buys for online advertising are becoming increasingly popular. Advertisers are looking for more measurable and accountable channels to achieve their ROI goals. At the same time, publishers are increasingly offering performance models to ensure they remain attractive and relevant to the needs of today's advertisers, while monetising their inventory. The challenge is how to embrace these new opportunities effectively and tap into the latest technologies as a means to help drive effective campaigns that deliver bottom-line returns time and time again.
Roger Williams is director of international marketing at Right Media.
