- Category: September 2010
Pay-Per-Performance Advertising, or PPP, is a term used in Internet marketing to define a popular pricing model whereby a marketing agency receives a payment from an advertiser for each new lead or new customer obtained for the advertiser through the agency's online marketing efforts.The agency creates advertising campaigns and promotions to successfully convert the maximum number of new leads or customers and gets paid for its work only when a new lead or a new customer is passed on to the advertiser.
PPP advertising became popular with the advent of the World Wide Web that allows real time measurement of an advertising campaign's ROI. It has reversed the traditional value proposition of advertising whereby an advertiser is required to pay for the advertising agency creative work and media first regardless of the ROI of the campaign. In the PPP model, the onus is on the agency to create a performing ad campaign that converts into good leads or customers if the agency wants to receive payments from its client. In contrast with traditional advertising pricing models, the advertiser pays the agency only after having collected the revenues from its customers' purchase orders and not before.
In a nutshell: You do not pay if there is no result or profit. Instead of paying to place your ad, you pay for each lead your ad successfully produces.
While being listed prominently in search engines is the fastest way to pull lots of prospects to your web site, your URL, unfortunately, can get lost in the crowd of millions of Websites. Pay-Per-Performance search engines give you a way around this problem by listing your site higher for a fee. You can pay as little as a penny a click for each prospect the engine sends to your site. If no one clicks on your link, you don't pay. So you can adjust your listing until it works for you without high costs.
The disadvantage however to Pay-Per-Performance search engines such as GoTo.com, FindWhat.com or NetFlip.com, is the fact that many keywords get very little response due to high competition for the same keywords, so the price can go up to several dollars per click.
Pay-Per-Performance banner advertising is quite popular as well, as companies are trying to go around the pricey CPM banner purchases and opt for services like ValueClick.com and PennyWeb.com who ask for payment only when someone clicks on the banner or visits the site. Just make sure to keep your banner's file size low for rapid loading.
It seems that the newest innovation in Pay-Per-Performance advertising, using innovative banner ads to collect the email addresses of your target customers is probably the best idea, so far. You only pay for confirmed email sign-ups of prospects that enter their email address to receive information on your business. In that way you build up your own opt-in email list which you can use for sending out new offers or news whenever you want.
Most Important: All three Pay-Per-Performance advertising formats allow you to focus on getting results rather than just increasing awareness – be it search engines, banners or email.
Attention: Don’t get confused with Pay-Per-Click (PPC) advertising, which is a pricing model on the Web in which the advertiser pays when an Internet user clicks on its advertisement and visits its site. PPP is generally risk-free to an advertiser whereas in a PPC campaign the advertiser takes the risk of the conversion rate between a click, a visit and an actual lead or sale.