E-marketers pressing for performance-based advertising online
Online marketers will pressure the content and publishing sites on which they advertise to accept some component of payment for performance in more than 80% of the ad deals they strike within the next three years, says Forester Research. And while the media sites will put up some resistance to the ongoing switch from front-loaded deals, Forrester believes 70% of online ad deals will actually wind up being structured that way. But while pay-for-performance deals can bring down the cost of customer acquisition, the trend also may run the risk of backfiring on the advertisers if mishandled, warns Jupiter Media Metrix analyst Rudy Grahn.
“Pay-for-performance is a good thing for retailers because it helps them fix their customer acquisition costs,” he says. “That’s beneficial in the short term, especially coming off this time when those costs were so high. But in the long run, there are very few publishing sites for whom strict pay-for-performance is a sustainable revenue model. Unless there’re a way to make these deals work for the publisher as well as the advertisers, it could eventually reduce the number of media options advertisers have online.” For that reason, Grahn adds, hybrid deals that combine some front-loaded payment with performance-based incentives, already an increasingly common arrangement, are a likely trend for online ad deals in the future.
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