Marketing accountability is of ever-growing significance for advertisers and their agencies. For them to remain competitive, their marketing plans need to be both efficient and also fully integrated into existing product development, sales and delivery processes.

These marketing plans will typically include many different media types, and while online media is still only a fraction of total advertising spend, the migration of ad spend towards digital is led by performance-based pricing models. In fact, according to a survey by PricewaterhouseCoopers and the IAB in September 2011, revenues for performance-based models in online advertising are now double that of traditional online CPM models.

While CPM models offer advertisers a structure they are familiar with from offline campaigns, online performance-based media capitalizes on the direct interaction with consumers available uniquely within the medium and provides ROI and data-driven organizations with the transparency, control, measurability, engagement, scale and tools necessary to optimize campaign performance and back-office processes.

 

As advertisers attempt to navigate from offline to performance-based online models, the following best practices are meant to provide a framework to make the transition. Using this framework, businesses can establish success metrics, build performance models, define a target market, allocate time and budget, request proposals, short list candidates and deep dive into their specialties in order to find the right fit for a particular campaign.

Establish Success Metrics

Online performance marketing networks offer an array of channels and pricing models. Finding the right mix and identifying
the right partners are key steps to creating a successful performance-marketing campaign. To know which partner is going
to best meet your needs, you should first establish success metrics for your campaign. For example:

• Targeting number of actions/sales
• Increasing brand awareness (this comes free in
performance marketing)
• Creating specific consumer response
• Building an email database
• Increasing social media audience

Build a Performance Model

Performance-based campaigns are typically based on a cost per sale (CPS) or cost per action (CPA). An action could be anything
from a completed lead form to a booked appointment. While highly complex actions may result in a higher action-to-revenue ratio for the advertiser, keep in mind that the more complexity involved in the completed action, the higher the payout will need to be to remain competitive with other advertisersbidding for the same leads. Take these steps to construct a performance model consistent with your success metrics:

• If you have them, use KPI’s from other channels to baseline your performance model.
• Ensure you have effective tracking and reporting mechanisms in place
• Conceptualize offer flow
• Establish a conversion event
• Explore up-sell/cross-sell opportunities
• Set the conversion value and ROI targets
• Create your acquisition funnel
• Integrate your acquisition funnel with the back office
• Develop a testing plan for campaign variations

Define Your Target Market

Next, you should define the target audience you are looking to reach:

• Demographics
• Psychographics/life stage
• Media consumption habits

Allocate Time and Budget

Performance marketing is an iterative business where campaigns
should regularly improve based on collected data over time. Campaigns can also have long acquisition funnels, which dictate the velocity of campaign iterations. It is important that advertisers dedicate sufficient time and financial resources to give the campaign increased probability for long-term success. It is also paramount that they select partners who are capable of delivering the required results.

Request Proposals

Requesting proposals from potential partners is a great way to compare the differences in the offerings. You should communicate
the campaign success metrics, model and target audience to potential partners, and deliverables for those proposals should include:

• Where the traffic will come from
• Content of the traffic
• Compliance and fraud protection practices of the company
• Required creative
• Estimates on monthly reach and scale of network
• Targeting technology details
• Testing capabilities
• References of other advertisers especially in your vertical
• Costs

Short List Candidates and Deep Dive
into their Specialties

Once you have selected a few companies who meet your requirements, a deep dive with those potential partners can give you a clearer picture of who they are and how they differentiate themselves in the market. Many performance networks enter the market each year. Understanding the history of those businesses can help you gauge their ability to deliver for you:

• Who are the key executives in their business and what is their background?
• Do the Direct Marketing Association and/or Interactive Advertising Bureau accredit them?
• Do they now or have they ever operated under a different name or DBA?
• Approximately how much revenue has their company earned in the past year?
• What type of insurance coverage do they have?
• Have they ever run your campaign in the past, either directly or as publisher through another network?
• Have they run a similar campaign in the past, and how did it perform for them and the advertiser?

Typically, the sales person you work with will hand you over to an account management team or individual once the relationship
begins. Getting information about that team will give you clarity into your future experience with the company.

• How will the account management team be organized for your account?
• How many accounts are assigned to each account management team?
• How many employees are in the total company?
• What creative resources are available through the company?
• What analytical resources to help optimize the campaign are available to you through the company?
• Where are the company’s offices, and from which time zones will they manage your account?
• Are account management teams available by mobile phone after hours?

Compliance & Trust

Legal compliance and fraud protection are key differentiators from network to network. As an advertiser, you will potentially trust this company with your brand, so it is critical that their policies align with yours and that sufficient controls are in place for their publishers. Understanding the company’s approach to risk mitigation and best practices in these areas can help make you more comfortable with the idea of partnering with them.

• What procedures do they have in place to onboard new traffic sources?
• Who is the company’s head of compliance?
• Have they ever been subject to a governmental complaintor settled a consumer complaint related to online advertising?
• What technical and management controls do they have in place to enforce compliance?
• What privacy policies are in place to protect consumers through your network?
• Do they have a formal board of governance established (board of directors)?

 Traffic Mix & Quality

Finally, you need to understand the traffic that each network represents. Most networks will have a component of traffic that they control completely as well as a mix of traffic from publishers who they work with. In the initial testing phases of a campaign, the traffic that is directly controlled can provide great value by increasing the testing speed of creative and landing pages, while decreasing the time to market for the final product. When the campaign is optimized and ready to scale, the network will call on its publishers. Understanding the dynamics of both traffic sources will give you a clear picture of the path the network will take with your campaign.

• How much of their total traffic do they generate internally?
• Where do they buy or how do they generate this traffic?
• Can they guarantee the leads they generate for you are exclusive rather than shared with your competitors?
• Are there any websites that they own or operate?
• How frequently do they market to the same consumer?
• How many publishers do they have in the network?
• Can they make offers private to individual publishers?
• What offers are they currently running on their network?
• Will they provide full transparency of publishers if a non-disclosure agreement is signed post contract?
• What type of contracts do they have with their publishers?
• Would they be willing to have their publishers agree to your marketing guidelines as a condition of running the offer?

Performance Marketing Is the Future

In this age of marketing accountability, when consumers are giving increasing amounts of their attention to online endeavors, the question of whether to adopt online performance marketing is changing from “if”, to “when and how”. Businesses that follow the steps outlined above will find themselves with a head-start in performance marketing. They will realize the value of data-driven marketing and that it truly offers a sustainable competitive advantage.

About Ryan Wilson
Ryan Wilson is SVP and co-founder of Intela, an international online performance-based marketing company. He has an MBA from the University of Colorado and bachelor degrees in MIS and Marketing from Florida State.