Why pay on performance marketing makes sense

Published: 19th August 2016   Author: Mike Warren

It makes sense that you’d want to pay for something once it’s performed, doesn’t it? 

Why then, when it comes to advertising and marketing your business, are you expected to pay first, then HOPE for performance?

The truth is, that the advertising industry has been able to get away with selling hopes and dreams since it was first conceived. For them, business is all about maximising opportunity whilst minimising risk: you pay whether you get results or not. The risk is entirely yours. You’re forced to speculate to investigate, because without trying it, how will you know if it works or not?

When you part with your hard earned cash on traditional advertising, inevitably up-front, you’re effectively buying nothing more than maybes.

What’s more, advertising companies know that performance is incredibly difficult to measure, but a sharp, well trained salesperson will not only kid you into thinking their product is the one to ‘invest’ in to grow your business, but once you’ve become a customer and it’s time to renew your advertising, it’s the salesperson’s job to convince you that it was the right thing to do - irrespective of the results you’ve had - as you’re shown statistics and testimonials from other customers who have had a ‘great response’.

“Caveat Emptor”, as the old saying goes.

The good news is, those days are over.

Google was perhaps the biggest name to provide a pay on performance model with their inventive and highly successful Adwords, or ‘pay per click’ offering. It’s been a revelation - indeed, it’s that popular now that it’s made Google a multi-billion dollar business in a very short space of time and, for many, it offers a true ‘value for money’ approach to marketing. This is certainly true when you compare it to the old way of working. 

However, all is not as rosy as it may seem. The position of your advert is determined by many things, including the relevance of your advert text and landing page as well as the amount you are prepared to ‘bid’ for each click (the highest bidder’s advert goes to the top). The popularity of Adwords means that, if you want to be in the top 3 adverts, it can get expensive. However, the fact remains that you only pay when someone clicks on the link to your website. Brilliant!

Well, almost brilliant. I say this because, in reality, someone visiting your website is really nothing more than someone peering into your virtual shop window. If they don’t see anything that catches their eye, they move on - and they tend to move on really quickly. The customer doesn’t interact with you in any way but Google still want paying for sending that ‘potential customer’ to your website (we say ‘potential customer’, it could of course be a competitor, a salesman, a confused browser or some other non-potential customer). Each of these clicks will still cost you money.

So how can Google’s offering be improved upon? 

Well, if you were to move up a level and instead of paying for visits from ‘casual browsers’ you paid for phone calls from people in your location wanting the service you provide, your conversion rate will be so much higher - certainly if you are able to offer what the enquirer wants. You’d be talking to people who were at the perfect time in the buying cycle. People who had a specific need and were looking for someone to help them with it.

Welcome then, to Fairweb.


Mike Warren

Mike Warren

Mike's the resident Jedi. With a career in the marketing industry he now specialises in online marketing. Always trying to make you laugh, he can be found on the golf course in his spare time.


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