Internet advertisers are asking to pay for leads and sales generated from their advertising. They want the media and their agencies to be more accountable for the results delivered.
This is part of a growing international trend. In the performance advertising model, the advertiser pays only for measurable results, such as a completed sale or a specific action e.g. a loan application, a service registration, a download, or a business inquiry.
Performance advertising revenues, according to the IAB (The Interactive Advertising Bureau), exceeded 15 billion euros in 2011 – 64.6 percent of all internet advertising revenues in the US alone. Impression-based payment models now account for only 31.3%.
In the Baltics, no official research has been made publicly available, but estimates suggest the current level is increasing fast, even though currently no more than 20% of advertising budgets are spent on performance-priced models.
Over the past year, online advertisers in the Baltics have begun demanding higher return on investments (ROI) from their advertising campaigns. Many advertisers are either disappointed with, or unsure of, the results they receive when they pay just to have their ads displayed online. The sentiment echoes what Lord Leverhulme, British founder of Unilever (1851-1925), has famously said: “Half of the money I spend on advertising is wasted and the problem is I do not know which half.”
Tõnis Hinnosaar, director of one of the fastest-growing European performance advertising networks Pay4results.eu, explains why the biggest advertisers in the Baltics are not getting their fair share of performance advertising:
“In a way, it’s hard to understand it, because the attraction is clear to advertisers. Lack of information about massive savings available to advertisers, especially from media planning and buying agencies that control most of the online advertising budgets, may be a significant factor. We at Pay4results.eu must educate the Baltic market more.”
Tõnis adds: “Baltic advertisers who are using performance advertising are enjoying massive financial and competitive advantages over the ones that don’t. It’s just a question of time before we see more and more big brands trying performance advertising models. Our own performance advertising network is growing extremely fast. We are hiring almost every month to keep up with demand.”
Vilma Morgevičiūtė, marketing specialist at BIGBANK, has had positive experiences of using the performance advertising model: “In collaboration with Pay4results.eu network, BIGBANK has been applying CPC (cost per click) and CPA (cost per action) advertising models for successful implementation of Baltic region marketing strategies. It has been a successful cooperation so far and we hope it continues.”
Tõnis Hinnosaar will speak about the performance advertising explosion in the Baltics on 1 June at LOGIN 2012 conference.
