A few years ago, I was talking to a junior account executive on a southern California publisher sales force about pitching a cost-per-acquisition buy to one her clients who was already paying for impressions. Her immediate reaction was “No way, my advertiser is like, totally overpaying for this placement and I don’t want them to find out.”

I explained that if she worked with advertisers to get a higher conversion rate, she could actually get a higher eCPM than she was already getting. She looked at me as if I were an alien.

Later, we got on a call with a direct response advertiser, who stated that he would actually pay out a higher effective CPM on that placement if they could start buying on a CPA, because they would be getting the impressions that backed out for them, and they could spend more at a higher rate. I wanted to give him a big fat kiss. I could see realization dawning on the account executive’s face.  By working together with the advertiser, her inventory could provide the best value for them and they will re-invest more and at higher rates as a result.  

Why performance advertising
I still hear the same questions that the junior account executive was asking: why should I sell performance and how do I sell performance? More specifically, how can I sell performance to brand advertisers?

The frist thing to know is that performance advertising works and pays out. Publishers often tell us that it doesn’t and there’s no point in selling it—they don’t perform, advertisers don’t renew, it’s a lost cause. Performance dollars are growing—performance-based pricing grew by 11.8% in 2007, says the 2008 IAB Internet Advertising report—and that’s a lot of budget to walk away from. As a publisher, you have to make it work.

The beauty of performance ad products is that it’s not guaranteed—publishers can offer performance products without creating channel conflict, by offering it on non-guaranteed/unsold inventory.  It’s hard to dispute that the inventory is valuable and performs—in fact, this inventory is often monetized by ad networks, who consequently run performance buys against it.

Five steps to sell performance inventory
During a performance sales training at a large international publisher using Right Media, I was told that a top network in their market was selling their inventory on a performance basis and stealing their advertisers. The irony was that this network, and many similar networks, was using the same platform this publisher was using to optimize the inventory.

Publishers need to enable their sales force and ops teams to capture that performance and direct response budgets. Here are a few basic steps:

1. Stop guaranteeing delivery and performance. While they’re not mutually exclusive, if you don’t knowing how your inventory performs, you may set up the wrong expectations with your advertisers.
2. Negotiate for a test with new advertisers and campaigns, with minimum yield levels, timing requirements, creatives and placements. That way you both know in advance how your inventory performs with their campaigns.
3. Qualify campaigns based on campaign goals, creative quality, conversion path, consideration cycle, and success metrics.
4. Sell performance products but optimize on the backend to get performance and delivery—work with the advertiser to develop creatives, pricing types, adjustments
5. Adopt tools and best practices for optimization. Optimization is a balance between art and science—without the right tools, it’s a little too much Van Gogh.

Not sure where to start? If you need a little help, our Performance Sales Enablement professional service can give you some guidance.

Offline dollars are moving online, brand dollars are moving to brand performance, and advertisers are getting tighter on seeing performance results.  Advertisers care about their brand and always will, but they also care about results too. It’s time to offer products that advertisers want, and get disciplined about selling and optimizing them.

—Jeanne Hwang, Director of Consulting