In a well considered post, Matthew Buckland questions some aspects of online advertising.
He refers to 0.3% CTR (Click Through Rate) in online advertising as the target being chased. I think 0.3% is actually a relatively high CTR. I venture that it is still a significantly higher per-instance follow through than conventional print advertising can boast in most cases.
He points out how the ROI(Return On Investment) favors more expensive products.
I’m not sure I agree with the following argument that the internet is not as suitable a platform through which to market more inexpensive products – but the term ‘market’ is, I believe, the key (and the argument does hold if we consider only old-fashioned random banner ads). Yes sophistication plays a role but not just the sophistication of the bells-and-whistles, the sophistication and responsiveness of the business model is critical as well.
Enter the CPA (Cost Per Action) model. This is where so-called affiliate marketing‘s ‘pay-for-performance’ model comes into play. When publishers are rewarded based on what transactions result from traffic they generate to a merchant’s store, they suddenly have an incentive to not just ‘slap on banners’ but to use the technical sophistication that the net does allow to make sure the right people get to see the right offers.
This is why so many dollar signs flash in greedy eyes when ever Web 2.0 and Social Networks are mentioned. Whenevr you have 2.0 in any equation it is just a hop skip and a jump to membership accounts, which allow all kinds of clever profiling and ultimately, precision engineering the targeting of marketing messages.
But don’t take my word for it, Google have just gone and vindicated the entire affiliate marketing industry by launching their own affiliate marketing based advertising service , which looks like this.
One beauty of CPA is that it establishes a kind of self-regulating system, which ultimately reduces noise and increases relevance in digital media.
Although the notion of commission based incentives is not new, in internet terms the affiliate industry is only about five years old and is just starting to find its feet – and that is internationally. Locally in south Africa we are still far behind that and falling behind further each day. Even those of us that think we live on the right side of the digital divide in local terms are pretty backwater in global terms.
From what I’ve seen and heard the only products that are worth even just trying to sell in the South African web is flowers, tickets (e.g. movies, events, travel), books and financial services (insurance and to some extent banking).
Back to mr Bucklands post, I think there is already a lot of dissatisfaction with the low ROI of traditional advertising and its mostly ‘smoke and mirrors’ approach to business.
The future is about getting the most out of information and technology, and with some interesting patents up their sleeve it looks very much like the future will be a matter of BG/AG (Before Google/After Google:)
Links:
matthewbuckland.com » Online ads: What’s working?
SEO Round Table : Google Testing AdSense Cost Per Action (CPA)
Search Engine Journal : Google Pay-Per-Action Screenshots & Tracking
Groogle » Blog Archive » The real Google AdSense infiltration
Google Press Center (The Official Press Release: March 20, 2007)
AdSense Referrals Beta – Google (The Sales Pitch: aimed at publishers)