Pay-Per-Performance Ad Buying

We’ve lately been reminding you that it’s a buyer’s market out there when it comes to online advertising, and circumstances have not altered this any. This fact, however, does not necessarily alter one important attribute of an advertising campaign: return on investment (ROI). Just because you can buy advertising less expensively doesn’t mean that the ad campaign you run is going to be effective or generate any more traffic for your web site. To help improve these factors, there is a type of online advertising you can look at, which is what we’re going to review today.

Known as “pay-per-performance” (PPP) campaigns, these kinds of ad buys are ones in which you pay only when a certain action (like a click-thru or a sale) occurs. In PPP campaigns, the buyer negotiates a fixed price for this action, while typically the seller negotiates for a fixed minimum expenditure. As an example, you might negotiate for a $0.40 cost-per-click (CPC), while the seller sets the minimum buy at $4,000. Simple math will show you that this buy will *guarantee* you 10,000 click-thrus to your web site.

Such guarantees are certainly of more comfort than those provided by a standard CPM (cost-per-impression) campaign, which does nothing to assure you of site visitors. It also allows you to better measure and control the acquisition cost of a visitor, an important component of the ROI equation.

What’s not necessarily guaranteed in a PPP campaign is the time by which it takes to fulfill the minimum buy. If you undertake this kind of an arrangement with an ad network, you’re more likely to have your campaign completed by the projected date since, if they find that your campaign is under-performing, they can increase your ad exposure across their network. If you negotiate a PPP buy with a single site, you may want to think of the completion date as more open-ended — but at least it’s assuredly fulfilled!

How do you know you’re campaign has generated the promised numbers? Well, for one, you’ll have to work in conjunction with the sites or ad networks through which you’re buying to line-up tracking capabilities. Most organizations commonly involved in PPP programs already have their own tracking systems in place, but it’s also a good idea for you to consider verification options of your own. Techniques like utilizing unique landing pages for CPC campaigns, third party ad servers to track post- click behavior (refresh your memory with our tip “3rd Party Ad Servers“), or perhaps developing co-branded pages for single site buys.

It’s also worth noting that in a PPP campaign, you’re not limited to a minimum buy. You can set your own cap (the maximum amount you’re willing to spend), and, much like with a CPM buy, you can request to distribute your performance over time. You might want to do this when you’re dealing with a selection of very popular web sites that could potentially fulfill your campaign in a short period of time. That would end your campaign pronto!

Why wouldn’t you want to do this, you ask? Well, even though you’re aiming to get visitors or sales with PPP campaigns, with each impression of your banner served, you’re still getting visibility and branding, and one can make an argument for the value of this kind of exposure as well. All in all, it’s really going to depend upon the objective of your ad campaign in the first place that determines how you want your campaign parsed out.

Below are some ad networks and sites that deal in PPP campaigns:

Advertising.com – CPC & CPA (cost-per-action) deals
Valueclick.com – CPC
DirectStuff.com – CPC
NetZero – CPC
Click2Net – CPC & CPA
BannerPort – CPC
FocusIn - CPC
GetRelevant- CPA ONLY
iClicks – CPC

Are you interested in some of our PPP case studies? We’ll send it to you automatically by email if you send a blank message to mailto:performance-webadvantagetips@nova.sparklist.com.

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