The Continuous Rise of Performance Based Advertising Platforms

We all know that digital advertising is the new norm, and has been since Strategy Analytics called it the fastest growing marketing channel. If you own a business, engaging in some form of online advertising is practically mandated.

I say ‘some form of’ because there is more than one way to generate leads online. One method that is rapidly overtaking all others is performance-based advertising, which offers unprecedented ability to track and measure campaign performance.

In the Beginning

All advertising has a common goal: to build and sustain a connection between the advertiser and its target audience. Before there was a computer in practically every home, advertisements consisted of-

  • Billboards
  • Radio jingles
  • Newspaper and print ads
  • TV commercials

Now the flagship method for brand-based advertising is the video channel. Brand-based advertising on YouTube can boost a company’s conversion rate significantly: just ask Coca-Cola, which has nearly two million subscribers to its YouTube channel, or Apple, which boasts nearly six million.

These are impressive numbers, but they don’t accurately measure the success of a particular campaign or answer the all-important question of how to best allocate your advertising dollars. Performance-based advertising does, and this is why it’s set to take over the industry.

Performance-Based Advertising Explained

It’s exactly what its name implies: a form of advertising that tracks and measures performance. They require a fair amount of tweaking and testing in the beginning, but in the end they allow you to quickly determine how successful a particular campaign is. An added bonus is that you only pay when a required action takes place, such as clicking on a link or submitting contact details, and not when the ad is merely viewed.

Perhaps you have heard the famous John Wanamaker quote, which states: “Half the money I spend on advertising is wasted, I just don’t know which half.” Until recently, most retailers could make the same statement. Now, thanks to the expanding scope of performance-based advertising, we have access to metrics that Wanamaker and his contemporaries could only dream of.

Meet the Platforms

The three leading performance-based advertising platforms are Google AdWords, Facebook Ads, and the Amazon Associates Program. Each one has its own advantages and platform-specific ways of getting your brand in front of new customers.

Google AdWords

If you want your product to appear on the front page of Google, this is arguably the quickest route. Google Adwords is known as cost per click advertising because you bid on your desired keywords in order for your ad to appear in the search results. You pay when the viewer takes a certain action, in this instance clicking on your ad.

In addition to text-based Google search ads, Adwords provides access to mediums like the following:

  • YouTube video ads
  • Graphic display ads
  • In-app ads

Facebook Ads

According to Netimperative.com, social advertising like Facebook ads increased by over 61% in the first quarter of 2017. It is similar to AdWords in that you pay when the user takes a certain action, but Facebook offers better targeted audience options. You can choose from different ad types, such as-

  • Single images
  • Videos
  • Slideshows
  • Carousel ads

You can also place your ad on Instagram, an opportunity that is especially popular with photographers and companies trying to reach younger audiences.

Amazon Associates Program

Amazon has a partner program that actually started the affiliate marketing industry 12 years ago. Known as the Associates program, it allows users to display ads in the form of-

  • Contextual links
  • Automated ads
  • Widgets containing specific products

Website owners and bloggers can choose the products they want to advertise on their blogs and earn referral fees when visitors click on the ads and buy the products from Amazon.

All three platforms allow you to measure results based on click-throughs and, in the case of Amazon Associates, referral revenue. With traditional advertising mediums like billboards, print ads, and TV or radio commercials, it’s practically impossible to gauge success unless you directly ask the customer how they found out about you, a form of measurement that’s time and cost prohibitive.

The Evolution Continues

We’re living in an age of progress, so performance-based advertising is continuing to evolve. A recent deal between Postmedia and online retailer Indochino is a strong indicator of the direction the industry is moving in.

In October 2017 Postmedia, which owns the Financial Post, announced that it would be using print, digital, and native advertising to promote Indochino’s custom shirts and suits to its readers and web visitors. As part of the agreement, Postmedia would share a percentage of the retailer’s Canadian revenues in exchange for allowing Indochino to benefit from its vast reach and innovative digital resources.

This example of two companies leveraging one another’s strengths to grow their businesses is, in my opinion, the next stage of performance-based advertising. I also believe that the sustainability of advertising platforms will be their ability to demonstrate clear metrics such as likes, comments, and, most importantly sales.

Let me put it this way. If I asked you to pay $5000 for an advertising campaign today, and said that there would be no metrics to determine how well it performed, would you sign up?

Chances are that you wouldn’t. And this is why non-measurable advertising platforms are slowly fading away in favor of platforms with metrics that allow people to understand where their advertising dollars are best spent.

Raji Kalra is Co-founder and CEO at Peopletail, one Canada’s fastest growing product review communities.

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