local media insider

Pay-per-performance advertising overlooked

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Last week I sent out an email about a new case study the email subject line: Do you accept Pay-for-performance advertising?

My intention was to inspire members to look further at this model, by showing  how the Dallas Morning News cost-per-call and cost-per-sale programs will yeild an estimated $360,000 to $600,000 annually, in their first full year.

The question was misinterpreted by most of you;  I got a slew of responses (about 20) in which subscribers merely answered "No," "No "Not any more," "No thanks," and so on.

Only company said they accept pay-for-performance ads and only digital (not as valuable?) channels.

My question probably could have been phrased differently; several companies thought it was an RFP from an advertiser or agency. Typically these requests are altered so far in favor of the merchant that they don't work well for media companies.

But it's a huge mistake to write off pay-for-performance advertising. Why not have a real discussion about under what circumstance - and initiatives - pay-for-performance might add revenues?

The DMNMedia Model is uniquely well-thought through and organized - for one thing, like deals, they approach the right advertiser with the right price, rather then vice versa. That is, they control the deal, the call-tracking number (or sale-tracking process),  have an idea about what the best categories are  and a  pre-calculated estimate of what the merchant should be charged per lead or sale before going on the call (learn these from their experience in the case study). 

One of The Tribune's (and by the way congratulations on emerging from bankruptcy this week) new marketplace initiatives  relies on pay-for-sale in partnership with a real estate brokerage.  The second one, which is more mature is as much of a service as a "pay-for-performance" model, the development of an employment agency in which the "sale" is a successful hire. 

We've wrote about the potential for inhouse real estate agencies before, taking strategies from Utahmore.com, the inhouse agency of MediaOne Utah, which aims to challenge Coldwell Banker for marketshare leader. 

The Tribune model differs in that, while requiring a brokers licence inhouse, it is more of a pay-for-performance model. Essentially the ad packages for a few partnering brokers are identical to what is sold to other real estate advertisers; its just that the method of payment is based on a revenue share of the sale. 

This model will certainly evolve, but a core trait of successful media companies in the new economy is to learn to fail well- fast and cheap - and keep moving. Tribune's marketplace division may wind up far ahead of others who have yet to make their first errors.

We hope this inspires other media companies to explore pay-for performance models. They are worth more than a "No thanks," "Not at this time" or "Not anymore" dismissal, but rather require intential initiatives that creates new value propositions around known sets of criteria and target accounts. 

Many thanks to Eddie Tyner, Director of Marketplaces at the Tribune Company, for sharing his experiences at NAA MediaXChange and with LocalMediaInsider.com. 

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