All Advertising Online Should Be Performance Based

March 11, 2008

There, I said it. All online advertising should be performance based, period. For years I have been working with clients, and agencies alike all trying to make sense of their ROI online. At first we had the CPM model. During my time at Mediaplex, before it was a Valueclick company, and before the Ad Agencies saw them as a threat to their own in house media planning and buying teams, CPM was king. There were a few (to state mildly) issues with buying ads in a CPM scenario back then. Each third party ad server thought they were tracking impressions appropriately. Why was this a problem? Because if you’re an advertiser in 1999 and your using (for example) both Mediaplex, and Doubleclick to serve your ads, you may be paying $.33CPM for one and a $.44CPM to another. This may seem like pennies, but when you’re dealing with billions of impressions, the dollars start to ad up.

Back then this was OK….well sort of…that is until guys like Adam Gerber at The Digital Edge (Y&R) would start to ask questions about the impressions that he was purchasing on behalf of his very large, very demanding clients. I can recall Adam stopping me in the halls of the Digital Edge shoving a finger in my face, and saying “I want answers”….well the reality was that I had none for him. We didn’t really know if an impression was served or not. We could only assume based on certain variables. We could provide reports, but we could track that back to a sale. Some of the campaigns were strictly branding campaigns, which is great, but branding for who, how were they measured? Obviously this was a very qualitative not quantitative approach.

Then came CPC, and all was good in the world. Or so we thought. That is until fraud started to pop up.

Now we have CPA, or CPL, and this is the only manner in which an advertiser can actually track conversions. Why are you advertising online? To generate a conversion, whether it be a lead, or a sale…performance is the next step in the evolution in online marketing. Even in a branding exercises you need to track the conversions. If a click on a banner lands a user on a landing page, you want them to take action, not just view your landing page. If they view your banner, really how much “branding” is occurring? How can you quantify that? You can protect your brand by demanding you work with a transparent network, or you can protect yourself from fraud by demanding that you will only pay for a conversion after you’ve been able to confirm the pixel that’s fired, but you really can never quantify online advertising unless it’s performance based.