A Scalable Strategy to Reach "Non-Searchers"

Brought to you by Zephrin Lasker

One of the most important facets of a performance marketing campaign is performance. That's pretty obvious -- it says so in the name. If performance advertising has grown to account for 57 percent of the market share in 2008, it's because advertisers more than ever now demand results from their marketing investment.

But an equally important facet of a performance marketing campaign is scale. Scale enables advertisers to connect with a large percentage of the target demographic (or psychographic) -- consumers whose attention would otherwise be captured by the competition.

There are three pricing models in the performance advertising market, each of which is very different in terms of its ability to help advertisers scale their campaigns.

CPC pricing models are commonly used for search advertising. Given the broad reach of search engines, advertisers can scale their search campaigns with relative ease (Google alone reaches more than 77 percent of the U.S. internet audience).

However, search advertising suffers from an inherent limitation: Unless someone is actively looking for an advertiser's product or service, they will not see the advertisement.

This is why it is important that advertisers round out their CPC plan with other forms of performance advertising. Doing so will enable them to reach people that are a good fit for their products and services, but are not actively seeking them out.

Think about the young MBA graduate who has just stepped into the open world. That person might not be looking to buy a luxury vehicle today, but more likely than not, this will be an important consumer to build a relationship with, so that a very pricey 5 or 7 series is part of their celebration for a future promotion.

There are two routes that an advertiser in the performance marketing space can take to round out a search plan and reach this universe of "non-searchers": CPA (cost-per-action) advertising and CPL (cost-per-lead) advertising.

An advertiser using CPA advertising only pays when a certain action is completed, such as a sale. This is especially attractive to ecommerce companies, as they can incur marketing expenses only at the moment that sales revenue is realized.

However, CPA campaigns are not ideal for achieving scale. In a CPA transaction, a user has to typically fill in her or his credit card information, which results in a high drop-off. It should be noted that only a small fraction of potential purchasers are ready to buy at any given point in time.

With CPL advertising, marketers do not pay for sales, but instead pay for customer leads. A lead consists of the basic contact information of a consumer such as name, email, postal address, etc. (similar to the fields collected on a landing page of a CPC campaign).

Advertisers collect basic information of consumers to engage them via e-newsletters, community sites, social networking groups, Twitter groups, and loyalty programs. Once they have the contact information of consumers who have expressed interest in their offerings, they engage them. By conversing with consumers in a relevant way through these vehicles, they drive sales (and repeat sales).

An August 2009 eMarketer report estimates that 51 percent of advertisers deploying CPL campaigns engaged consumers through community and social sites; an additional 31 percent of advertisers sent out e-newsletters with special deals.

Due to the relatively limited information collected at the first point of contact, there is typically low drop-off in CPL campaigns. As opposed to CPA campaigns, CPL campaigns allow advertisers to build scale easily in a short time frame.

A good performance marketing plan will allow you to speak to a large percentage of your target audience while giving you the efficiency of paying only for interested consumers. It is important that you choose correctly between CPL and CPA campaigns as you add to your search engine marketing plan. Only one of them is for scale.