Performance-Based Advertising

What Is the Performance-Based Advertising Model?

Get results, get paid. That’s the basic idea behind performance-based advertising, where brands only pay when the ads they’ve placed lead to specific results.

The performance-based advertising model is one that’s used by digital publishers all the time. It’s a model that’s increasingly being favored by brand advertisers, as well, since it gives executives at those companies a way to measure how their campaigns are performing, and it ensures they won’t be paying for ads that don’t fulfill their intended goals.

From the publisher’s perspective, performance-based advertising can work in a few different ways. The specific ins and outs will depend on the advertising platform or ad manager that the publisher uses—and whether that solution is hosted or self-hosted.

In most cases, tracking on a performance-based campaign is done through codes. When unique URLs, codes, and phone numbers are included in ads, advertisers have a straightforward way to measure the number of outcomes that occurred based on each campaign. They can then compare the value of those outcomes to actual ad spend to determine return-on-investment (ROI).

Although performance-based advertising usually requires quite a bit of testing, publishers that offer it are giving their advertisers more bang for their bucks, so to speak. Large brand advertisers are more likely to work with a digital publisher that utilizes the performance-based advertising model.

The flip side, of course, is that the performance-based advertising model might not be financially lucrative for all publishers. Publishers with low traffic volumes will not always come out ahead with this model. If a publisher’s readers aren’t clicking on ads and purchasing products through those links, the publisher isn’t making money. That’s something to consider when evaluating whether the performance-based advertising model is right for your publication.

Working closely with digital publishers in a variety of mediums—including online magazines, local news, and niche blogs—we have found that there are three distinct ways to optimize the performance-based advertising model:

1) Testing Before Adoption
Because publishers who’ve adopted the performance-based advertising model only get paid when their readers complete certain actions, we recommend running the numbers and testing out this strategy before jumping in. Publishers might find that performance-based ads work better on certain properties than others. Or, they might find that website visitors are more likely to interact with ads when they are using a mobile website or the publication’s mobile app. In that case, a hybrid approach that involves running performance-based ads on certain web properties and traditional brand-based ads on other properties would yield the greatest results.

2) Connecting With Advertisers
Are performance-based ads something that your advertisers desire? Although the model is usually more favorable for advertisers than digital publishers, it’s not something all brands are interested in. For starters, a fair amount of work is required of the brand’s marketing team to create, manage, and track the results of unique links, telephone numbers, and tracking codes. If performance-based advertising isn’t something that your core group of advertisers is interested in trying out, then now might not be the right time to adopt this strategy.

3) Choosing an Ad Manager
Lots of advertisers and publishers are interested in performance-based advertising, but taking the leap and actually implementing this strategy is the challenging part. Few e-basepublishers are capable of managing performance-based ads on their own. In most cases, we recommend working with a partner like Broadstreet, which offers a specialized ad manager for direct, digital ad sales. Ad managers, like Broadstreet and others, simplify the process of creating and tracking URLs and phone numbers, with special tools for tracking the performance of digital ads.

Which Metrics Should I Track?

Managing a successful performance-based advertising strategy involves working with an ad manager that can handle tracking content. Still, as you design your program and sell these ad types to brands, you might be wondering what types of events or actions are worth tracking.

A few of the most common event types to track as part of a performance-based campaign are:
• Ad views
• Link clicks
• Direct telephone calls
• Purchases from unique links
• Mobile app installs
• Usage of coupon codes

As part of their direct sales packages, digital publishers can offer to track some, or all, of these metrics. On a daily, weekly, or monthly basis, the publisher’s team tallies the number of actions taken and bills the advertiser based on the agreed upon rate.

If you’re interested in learning more about how to maximize profitability using the performance-based advertising model, then reach out to our team here at Web Publisher PRO and schedule a virtual consultation.