The Prospektor - Uncovering Qualified Lead Generation

What’s Up With These Ad Exchanges?

Double Click announced a bid-driven ad marketplace a few weeks ago.  Today, Yahoo said it was buying the rest of Right Media.  As we all know, Google in March revealed its commitment to an auction approach to Cost Per Action.  Big players clearly see some value in bringing buyers and sellers together for online display ads.  Is this the future?

I’d say it is at least part of the future for CPL and CPA.  A successful exchange requires transparency and measurement standards.  In the equities markets, the former means quarterly reports and10K’s, and the latter means agreement to evaluate stocks on earnings or revenue. 

But in the world of performance advertising, there’s a real risk of “apples and oranges”.  How can an exchange equate the value of a sale versus a newsletter sign-up versus a webinar attendee?  It will be fascinating to see how these exchanges approach the multitude of possible actions.  In the meantime, there’s real value in standardizing programs for niche advertiser needs.  I’d appreciate any thoughts on how the evolution to exchanges might happen.

Google's Auction

Much was made of Google’s recent announcement that they’d be introducing an auction-based cost-per-action business model (in fact – I made much of it myself over at MediaPost’s Performance Insider (reg req’d). Most of the coverage I’ve read tends to be centered on how Google is yet again bringing new innovations to the marketplace. If only that were true. Cost-per-action is not new.

Indeed, it is a proven part of the advertising arsenal, getting its own line in more and more marketers’ budgets. So if cost-per-action is not new, is there anything notable in Google’s announcement?  Yes and no.

While Google may not being breaking any new ground, they are speeding cost-per-action to the forefront in the online advertising space. For that we should all be grateful. However, I think the most interesting part of Google’s plan is also the least clear – how the heck will the auction work?

An auction for keywords is simple to follow. A keyword is a commodity, after all, and commodities are easy to price and bid for.

An “action” is something else entirely. It’s just hard to see how it all will work.

Let’s assume there are two companies, A and B, and both are trying to fill up a seminar. Company A uses seminars to sell $5,000 training courses, while Company B uses seminars to get leads for mortgage origination, for which it receives $200 per mortgage.  These companies would no doubt value seminars differently. How are they to be equals in a bidding process?

And let’s assume the action is something more in line with the common perception of cost-per-action – a sale of a product or service. How will Google know what was sold? The honor system? Will it require that they somehow get integrated into a company’s back-office financial software?

And what about fraud? For an enterprising – if unethical – individual, making a little extra on the side will be pretty easy

Let’s assume Jimmy the college student is excited because Spring Break is about to arrive, and he has a big blow-out to Mexico planned with 10 fraternity brothers. Jimmy has built a pretty successful blog about college sports and his school’s Greek community.

Google introduces Jimmy to its cost-per-action program, and, strapped for cash before the big Spring Break trip, he has an ethical lapse. He sets up his blog to begin posting a student loan ad that brings with it a $50 action for every sign-up to attend a seminar. Seeing some easy money, Jimmy encourages his fraternity brothers to respond to the ad, and before  you know it, they’ve “raised” enough money to cover their beer tab, and the student loan company gets nothing but a bill.

A larger fraud would likely get the attention of Google’s click fraud police, but something like this is likely too small to be noticed, and very likely too small to be addressed.

In the end – a big thank you to Google for bringing the next generation of performance advertising to the forefront. But please Google – make it more clear how the whole thing works, and how you’ll prevent click fraud.

I should note that I have nothing against Google – so if a Googler reads this and finds my wonderings unnecessary, please reply.

IMUS, ADVERTISERS & CHOICE

What does the firing of Don Imus for inappropriate remarks have to do with performance advertising?  Look at it this way: Cost per Lead and other performance programs are about choice or opt-in.  Traditional media are not.

In the Imus debacle, the sages of MSNBC and CBS made choices for consumers – without really consulting them.  A few advertisers bail out.  A few hypocritical leaders express outrage.  And the corporate decision-makers capitulate.  In the Imus mess, a legacy of good works – including skewering the hypocrites – is tarnished.

This is not democracy.  Consumers (listeners and viewers) had no vote.  Decisions were imposed upon them by advertisers and broadcasters.  Perhaps the good news is that this is probably the end of an era.  As online media and performance advertising grow, advertisers will need to listen to the voice of the consumer to build loyalty and business and stop running for cover.   People can opt-in or out for offensive speech or political clarity – and they’ll appreciate advertisers that don’t make decisions for them.

Google Gets More Attention...

Wanted to make sure that everyone read last week's post by Gary on MediaPost's Performance Insider.  Here is an excerpt:

....To get out ahead of the Google juggernaut — or to enhance the performance-based ads you’re already running — here are six steps to getting the most out of a cost-per-action program:

1. Demand accountability now from your marketing spending — even your traditional media advertising.
2. Define marketing victory and focus all your media to working toward this goal. Is it immediate sales? Building relationships with target consumers? Educating consumers? Growing ROI?

Read more at:

Media Post Performance Insider Blog
Posted April 5th, 2007 by Gary Kreissman

ARE AGENCIES LEADING The CPL CHARGE?

Google’s CPA (Cost Per Action) announcement has sent some shock waves beyond the competition.  Many agencies – interactive, general, search or direct – have been muttering “What do we do when our clients ask us about THIS?”

I grew up in the agency business – as a mere lad, I was initiated into the joys of developing newspaper coupons and competitive analyses for Maxwell House Instant Coffee.  One of the highlights was working with the great Margaret Hamilton who had morphed from Wicked Witch to country store proprietress, Cora the coffee lady.  But I digress…

I did learn one of the great secrets of agencies back then: too many established agencies become conservative, reactive organizations.  The maverick agencies that seem to come out of nowhere are not just the hot creative shops.  Often, these are the agencies that get ahead of the curve on new executional or media ideas and show their clients how to leverage these ideas to accelerate growth.

Of course, no one would consider lead generation a new idea.  But we’re beginning to see savvy agencies adopt the online version of qualified leads as the solution to venerable problem of identifying and selling new customers for niche products cost-effectively. 

It makes sense for agencies to learn how to use CPL techniques – not only to add billings but to preserve them.  Many agencies saw a budget drain when performance advertising emerged in the form of Cost per Click.  Considering how CPL often delivers higher ROI, this budget drain might well grow.  CPL and qualified lead development in particular is deceptively simple.  Getting in the game is easy – making money isn’t.  Solution: Agencies need to tap the firms that have been learning their way through this for years. 

Oh, and in case any agency wants to talk to one of those firms - our number is listed!