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Monday, February 4, 2008

Beat the Recession Tip 3: Pay for Performance Marketing

Posted by @ 3:23 am

When financial times get tough in small business, it’s important to ensure your marketing efforts are generating a decent ROI (return on investment). This is where “pay for performance” (P4P) online marketing is vital.

“Pay for Performance” marketing is, as the name suggests, an approach where you only bare a cost for a particular response or conversion. Performance based marketing ensures you get a return on your marketing spend – assisting with your ROI goals.
So what types of Pay for Performance online marketing are there?

Affiliate Marketing
Affiliate marketing is one of the original pay for performance marketing strategies. With affiliate programs, you choose your desired conversion (lead, sale of a product/service etc.) and the rate/fee you wish to pay. It’s then at the discretion of publishers whether they promote your goods/services.

Affiliate Networks help to facilitate this by providing a platform to promote your companies affiliate program and also create a single place where publishers can find suitable advertisers.

They key to affiliate networks is getting the balance right between offering an attractive commission to attract publishers and not over-paying to the extent where you hurt your ROI.

Pay per Action Online Advertising
Several online advertising programs offer pay for performance models. Many people believe that PPC (pay per click advertising), such as Google AdWords or Yahoo! Search Marketing, are P4P models, but given that the advertiser is responsible for conversion – this is not entirely correct.

That said, search advertising and other pay per click models do provide strong ROI possibilities for advertisers as you are assured of traffic/visitors for your investment. If you’re fairly confident of conversion rates – then they can be a safe ROI advertising choice.

Companies like Google have created hybrid models which run off their traditional advertising platforms, but offer affiliate style “pay per action” fee structures. While mass adoption is low at this stage (Google’s was a beta test), in tough financial times expect to see more advertisers seeking these options.

Lead Generation Programs
Online lead generation models have become more prevalent of late. Lead generation programs offer advertisers qualified prospects for a set “per prospect” fee. The advertising provider carries the burden of promoting the business, with fees only charged for a genuine enquiry.

Like “pay per click” models – conversion of leads is still the responsibility of business owners, but it removes a substantial part of the advertising risk. The key is to ensure providers are delivering quality leads which are the inherent problems with such programs.

P4P marketing such as those described above goes against the traditional advertising methodology where clients pay for creative or services with no assurance of results.

Pay for Performance online marketing, with its real time tracking and accountability, has enabled advertisers to sure up ROI and reduce promotional risks. This is especially important for small businesses in tough financial times.

Rene LeMerle Rene is the marketing manager of - a global search engine marketing company. He also leads the marketing for - a web 2.0 style community for online and digital marketers. Rene has been in the industry since 1997 with much of that time spent helping businesses embrace the best of the internet and digital world.

View Rene LeMerle's profile

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