Accountable marketing, with a highly visible correlation between expenditure and results is much more defensible than, for example, "image" or brand advertising. However, not all media are willing, or able, to operate on a payment by results basis.
Let's consider the point. In order to offer payment by results, any media owner must have confidence in the product. Why? Because working on such a basis means taking all the financial risk upfront as advertisers pay purely for the responses received.
So, in order to assess the feasibility and level of risk, the media owner must be able to predict accurately the level of response for each type of advertiser. This is no easy task. Unfortunately, there is no fixed rate card that can be used because the formula is different in each case. In order to offer a competitive cost per response, past experience and a degree of judgment is needed.
Without a doubt, the offer of a travel brochure will generate more response than a major home improvement product. And the response to a fashion catalogue will be greater than that of a cosmetic surgery company.
Another variable to consider is that the value of leads to the advertiser will also vary. High ticket items such as a driveway or conservatory can absorb a higher cost per lead than, for example, a charity Christmas card catalogue.
In many instances, payment by results is simply not feasible. Take direct response TV advertising -- an interesting case in point. One stage shopping commercials have been around for many years now, but the channels are increasingly reluctant to take on new purely "payment by results" spots, as the response levels have generally drifted downwards, despite exceptions and highlights.
Who is going to decide what the most effective advertisement on TV next week will be, and judge the number and value of those responses? And to then negotiate a rate per response or sale with the advertisers is an immensely challenging and complex task. Different advertisers will get different levels of response in the same media and it requires a huge knowledge bank and experience on the part of the media owner.
So, I am not suggesting that the days of the rate card are numbered and that in future we will be paying for results on all media because owners are not all going to roll over and offer pay per response.
At the end of the day, the risk is already there for publishers. Whether magazines, TV or direct mail, the production costs are committed up front and, if advertisers are not happy with their results, they don't come back.
But for some media owners it is a feasible option and they are able to tell advertisers what to expect for their money and so they can then plan their supply of leads accordingly.
You would be forgiven for thinking that I have my own axe to grind but, actually, I don't. RDP's consumer card decks operate on a cost per thousand basis. It works for us and it works for our clients. On the other hand, RDP also publishes a range of response catalogues, targeted to various groups of consumers at home where clients are charged on a cost per response basis. That, too, works for us and the participants. It's horses for courses and we're backing both.
Whatever the payment terms, media owners are acutely aware that their success rests on the results they deliver to their advertisers as well as their readers and viewers. They provide the vehicle; it's up to brand owners how they drive it.
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