While signs point to an increase in online ad spending, the current economy presents opportunities for companies with little to no media budget to have a presence online. Online advertising offers a number of chances to build trust, boost awareness and drive sales, the last being the key to a tactic used by many media planners.
When budgets are tight, online display advertising presents a great opportunity if you have some form of conversation that can be measured, such as e-commerce (Amazon). The potential lies in ad networks (e.g., LeadImpact, ValueClick) and their willingness to participate in cost per acquisition models (CPA). Integrating ad networks into online campaigns is nothing new but understanding how to leverage them in a way that generates return is something any business can easily approach.
To get started all you need is a test budget of $10,000 that a network can use to gauge the ability to drive acquisitions through its audience on a CPM model (cost per 1000 impressions). Shoot for a 4% conversion rate during the test period and offer credit for post-impression sales (the action of seeing an ad, not clicking and later visiting and converting). Once the test is complete, negotiate to switch to CPA so you will only pay the advertiser when a sale occurs. As you adjust your average sale, you can change the payout. For example, an average payout on a $40 sale is about $16.
For small businesses this approach can be very lucrative. You will be collecting cash on the day a sale occurs and won’t have to pay the advertiser up to 60 days, increasing your cash flow.
Follow this approach and you could have a never-ending revenue stream in no time. Oh, and if you have no online creative, ask the network to develop it for you. It may not be the best, but it should do the job until you are ready to invest in a creative team.
Alex Matjanec is managing partner and head of media and communications for AD60, a Web product development agency.
