The Importance of P4P
As companies have become more erudite in how they allocate their promotional budgets, they have been increasingly transitioning from the traditional advertising service/payment model that has been in place for decades. The days of paying merchants 100% of fees with no risk to the agency and very little accountability have given way to a much more effective and well-rounded approach– Pay for Performance.
P4P (Pay for Performance) advertising became exponentially more popular with the arrival of the world wide web that allows real time measurement of an advertising campaign’s ROI (Return On Investment). It flipped the traditional value proposition of advertising 180 degrees. Traditionally the advertiser/merchant was required to pay for the work of an advertising agency/network and the media/affiliate first, regardless of the return on investment of the campaign to this new payment structure. In the P4P model, the responsibility is on the agency/network/affiliate to create a performing ad campaign that converts into conversion resulting leads or customers if the client wants to receive payments from the merchant.
P4P introduces accountability into the mix, a component that was severely lacking in the traditional advertising arena until the P4P introduction, which minimizes the financial risk that has been historically assumed by the merchant. With traditional merchant returns down, it’s no wonder that conventional companies such as American Express, Wal-Mart and even Disney are herding to P4P marketing. When working with traditional marketing methods, it’s no wonder they’ve been on exit mode for quite some time.When working with a P4P model, advertisers have minimal risk; they purely pay a commission when an actual sale or lead is generated. No sales/leads, no commissions to be paid.
P4P deals are being tightly managed to produce better results for both marketers and operators of content sites that host the retailers’ ads. Affiliate network providers like TheMediaCrew.com/RevenueStreet.com are digging deeper into their networks and spending time and resources to hone in on matching retailers with the affiliates most likely to deliver buyers. “We looked at our data and recognized that only about 5% of the affiliate sites were really driving sales,” says Rustam Irani, COO of TheMediaCrew.com. “The 80/20 rule— states that 80% of your sales are typically generated by 20% of your customers—is more like 90/10 in this business. We look at pay-for-performance marketing as a way to utilize our skill sets to focus in on the affiliates that can produce the best results for our advertisers. We carefully select offers and match them with publishers we believe are going deliver the most traffic.”
Part of the value that an affiliate network brings to the online advertising scheme is that it helps the merchant determine which sites to target, and then ensures that the affiliates are doing their job. “We rely on the affiliates to make sure that the traffic they deliver is targeted. TMC/RevenueStreet works one to one with its affiliates to make sure that happens,” President Nick Foley says. “They go out and sell the offers to the affiliates. An affiliate has only a limited amount of ad space and attention to give to a cornucopia of merchants, so our job is to make sure the right affiliates allocate a larger percentage of their attention to us rather than to someone else.”
Affiliate marketing is a win-win situation for both the marketer and the affiliate; the full risk and loss are levied across all parties involved. Working together, they can be an advantage to both. The Pay for Performance pricing model is an integral component for successful campaigns in today’s online advertising industry. P4P marketing, delivers advanced solutions that facilitate strategic online relationships, driving accountable results for each client.
The growth of the P4P industry is assured by the success of the system, and with the Internet constantly evolving with ever-increasing niche markets to be found, there’s something for everyone.
By: Shannon Foley | Senior Affiliate Manager | RevenueStreet – A Division of TheMediaCrew