In the 2008 Internet Advertising report, performance advertising accounted for as much as 57 percent of the total spend -- up from 51 percent a year ago. This growth has come at the expense of display advertising which fell to 35 percent -- down from 45 percent in 2007. Looking for higher returns, advertisers are increasingly investing their marketing dollars against cost-per-click (CPC) and, even higher up the ROI ladder, cost-per-lead (CPL) pricing models.
But is performance marketing for everyone?
Can it be used by both brand and direct response marketers? Can it be used across all industry sectors?
Yes. Yes. And yes.
Performance marketing for branding
Brand marketers can leverage performance marketing by using a two-step approach.
In the first step, collect the basic contact information of consumers who have shown an interest in your brand. To accomplish this, use search ads that direct users to a landing page. User information can also be captured through CPL advertisements that capture user information on the publisher site itself and send it to the advertiser on the back-end.
Once you have the consumer contact information (also called a lead), you can engage the consumer through a variety of interactive venues. Email newsletters, social networking sites, Twitter forums, and innovative widgets let you communicate with interested consumers in customized, relevant, and meaningful ways, while being able to stay in control of the branding message.
The move from a "broadcast" approach to an engagement-oriented one is a fundamental shift in online marketing. In their report, Marketing's Key new Metric: Engagement, analyst firm Forrester stressed the importance for marketers to rethink their strategies. The report states, "The marketing funnel is a broken metaphor that overlooks the complexity social media introduces into the buying process...marketers need a new approach."
We have seen several examples of marketers using the engagement approach in recent months in meaningful and relevant ways -- the Obama 2008 Presidential Campaign, the Kimberly-Clark campaign for Huggies, the JetBlue Twitter Forum, and The Mercedes Benz community site are just a few examples.
In addition, there is a positive impact on branding metrics on the campaign front-end also. As can be seen in the ads for Kimberly-Clark, Gold's Gym, and Graco Nation, CPL advertisements let advertisers incorporate graphical elements in the creative. Even plain-text search advertisements have been found to influence branding metrics positively. A 2007 comScore study found that searchers for CPG products were not only far more likely to be engaged with the brand, but also more likely to make offline purchases.
This of course, brings us to the question, does performance advertising work only for brands with a more engaged user base (such as a diaper company marketing to online moms)? Or is it applicable to marketers across all industry sectors?
Performance branding across all industry sectors
Let's look at the example of the luxury marketer -- say Ritz Carlton or Audi. It is important that in addition to targeting the rich and the affluent, their advertising also reach the 20-something young professional who is likely to be a future buyer. In such cases, admittedly, search advertising does not work optimally, as the young professional might not be actively searching for an Audi.
However, you can still use cost-per-lead advertising to reach these 20-something professionals by placing ads on websites that have a high composition of this demographic. The brand still receives the branding benefits of CPM advertising -- but you only have to pay when someone actually signs up for their offer.
In tough economic times, brand marketers are under increased pressure to generate increased returns from their marketing dollars. By using high ROI CPC and CPL advertising, you can acquire interested consumers. Once they have done this, you can continue the branding effort through interactive venues such as email, Twitter, and social networking sites.
The good news is that performance advertising is for everyone.
Zephrin Lasker is co-founder and CEO of Pontiflex.
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