Online Media's Odyssey: Performance compensation model

author: Jeremi Karnell – CMO & Founder

“The Sirens, they say, had maidens’ features, but with wings and from thighs down they had the forms of birds. They played the flute, lyre, and sang. The isle where they lived was full of the mariners’ bones they had led to destruction. It was foretold the Sirens would die when a ship passed them unharmed. Only Odysseus, bound to the mast heard their lovely song and lived, while his shipmate’s whose ears were filled with wax sailed on.” (Adapted)

2002-2003 will be known as the glory years foronline performance-based marketing opportunities. This is a resultof two primary factors: the rise in popularity of paid search and asagging economy in which few have spare ad budgets to waste.

Both have taken their toll on online publishers whohave seen their traditional media compensation model,cost-per-thousand (CPM), drop from an average of $35 to $7 anddemand for their traditional pricing model drop -22.5%[i] in just 2years. In response to this changing environment many publishershave begun to allow their online inventory to be purchased on aqualified CPL/CPA basis, meaning that both the publisher and theadvertiser jointly agree to the unique metric that defines a leador an acquisition and the cost associated with each. This is howthe publisher is compensated regardless of how many impressions areserved, the click through rate, the creative performance, etc.Clearly, cost per qualified lead or acquisition is a step farbeyond the pay- per-click options provided by Google and Overturein their paid search offerings.

Publisher sales reps, hungry for any revenue theycan find in these lean times, wooed agencies and marketers alikewith the Siren’s song of performance compensation, and manyfollowed willingly, adding online media to their portfolio ofexisting CPA tactics such as search, affiliate programs, ande-mail. However alluring these deals may seem, publishers andmarketers alike should proceed with caution because there can beserious obstacles to navigating the CPA waters.