The Birth of Performance Based Internet Advertising, The Death of Advertising Agencies

A funny thing happened on the way to Internet advertising; people never really bought the ads.

Some Web Sites sell their ad inventory. But not most; search around the Internet and the herd mentality is amazing. Yahoo and AOL sell bundles of advertising at very high prices; outside these sites, and the top ten players, things get a bit thin in the advertising budgets.

In a recent Forrester Report, executives were asked what types of Internet advertising they favored. At the top of the list were banner ads; at the bottom of what they liked were affiliate programs.

They were then asked what types of Internet advertising performed the best. Now banner advertising was on the bottom, and affiliate programs were on top.

So while executives like banner ads, they know that affiliate programs work best. The transition of these figures can't be ignored. If you are managing an affiliate program, your management likely doesn't understand or even like what you do...meanwhile the banner ad folks get the glory.

After all, people don't usually get fired for running a bad banner ad campaign; everyone assumes that banner ads don't work. But affiliate programs gain the most scrutiny, because they are expected to make money.

The irony is that few of the big advertising agencies have adopted affiliate programs; their main job is shifting checks from the buyers to the sellers of advertising space. I-Traffic has been an exception, yet its business is still run by ad agency folks who don't understand the power of performance driven advertising.

Which leads to the interesting transformation happening at ActiveMarketplace. By specializing in affiliate programs, we focus on performance. Taking this approach out to a market spilling over with unsold ad inventory, negotiating better CPM rates and integrating revenue sharing via affiliate programs is standard practice.

We integrate our banner ad budget, our opt-in email budgets, and all other forms of advertising buys with revenue sharing. In combining these aspects, ActiveMarketplace finds itself in a potent position to offer performance based advertising through affiliate programs.

If you don't think this is important, think again. A recent inquiry at our office for ad space began with the company bragging about financial sites that generated 50 million impressions per month. The salesperson then bragged that DoubleClick would pay 10 CPM for their ad space.

Problem is, DoubleClick only paid if it sold the space, and then it was 30-60 days before they would see payment. The financial site ad manager then made the offer of buying any portion of that ad inventory for $2 CPM.

Here's the key; we offered to buy a certain amount of banner ad inventory and be given an equal amount of impressions for revenue shared advertising. We would get twice the inventory for half the price, $1 CPM.

These kind of deals are reshaping ad buying online; if your affiliate program does not integrate all other aspects of advertising at your company, you are missing out.

Give me a call at 530-873-3637 or email declan@activemarketplace.com if you would like to learn more about performance based advertising.

Double your ad power and trim your budget; these are the real strengths of a good affiliate program.