Brand Central Station

For decades, advertising agencies and the media have operated under a shared myth about what they do. The canard runs something like this: “Create brilliant advertising that gets people’s attention, run it in enough places the consumers can’t get away from it and eventually you’ll see your share of market increase as a result.”

When it came to generating measurable performance, agencies and the media gave lip-service to “Return on Marketing Investment” and other things that sounded very measurable and analytical; but the hard truth of the matter was that advertising has always been a fairly imprecise endeavor – and everybody was fine with the smoke and mirrors of it all.

That was until the Internet and attendant technologies made measurement of every customer interaction with a commercial message a measurable event. Clients, sitting along side their agencies and the media reps who sold them the space, could see exactly what was working and what wasn’t.

And not much was.

Not all of the conventional marketing and advertising wisdom had to be thrown out the window – but a lot of things had to change in order to make sense of the new realities of an interactive and completely measurable medium. The marketing profession – both on the client side and on the agency/media side – has been scrambling to find ways to produce results from online campaigns that meet reasonable expectations of management.

Traditional display advertising, like print ads in newspapers and magazines, seem to take up plenty of real estate on the web page, but no matter how many impressions the web site is able to guarantee, there has not been a reliable methodology in place for associating the media inventory purchased with the customer transactions that result.

PR efforts – attempts to tell the client’s story in the form of editorial content – are helpful in forming opinion but usually lack a significant or engaging call to action. Consumers may be educated, but the ability to act on that education is an issue.

There are a lot of possible solutions out there. And one of them debuted this last Spring (on April 20th) at ad:Tech in San Francisco. Hydra, one of the largest CPA ad services in the country announced its partnership with OnDialog, Inc. Leveraging the combined resources of OnDialog (and its partnership with landing page optimization company, Site Tuners), Hydra now claims an ability to increase conversion rates of online ad campaigns by as much as 80%.

But first, a little background on Hydra. Hydra is the largest and fastest-growing, pure performance-based, CPA affiliate network. For those of you not familiar with Internet ad-speak, that means that Hydra produces and manages online ad campaigns for clients and gets paid only when a customer is captured by the campaign. This is the same premise as the old “per inquiry” television ads that allowed television stations running the ads (usually late at night) to receive a fee for each sale made as a result of the broadcast of the ad.  Similar campaigns in magazines required the advertiser paid the magazine a percentage of the orders received using the order form from the magazine.

As a performance-based, CPA network, it’s in Hydra’s best interest to make sure the landing pages customers click-through to are effective and hard-working.

Enter OnDialog/Site Tuners.

The Site Tuners engine allows OnDialog to create customized landing pages from a set of variable elements. As customers click and interact with the landing pages, OnDialog learns what elements perform the best and serve the most effective content accordingly. At any given point in a campaign, the OnDialog/Site Tuners system can test up to 10,000 different combinations of elements sewn together in various combinations to create a myriad of landing pages.

As time goes on, the effectiveness of the landing pages continues to improve and additional customer data is fed back to the creative team for the on-going development of more and more effective page elements. For a company like Hydra, shortening the “learning curve” of what makes a landing page effective is paramount. The partnership with OnDialog/Site Tuners does that in a big way.

In my conversation with Mason Wiley, SVP of Marketing at Hydra, he explained why the OnDialog/Site Tuners relationship is so important to Hydra:

“We have a lot of entrepreneurial clients who need to make sure every dollar they spend online is working as hard as possible for them. Our model offers clients an opportunity to run a high-impact, online campaign with no upfront expense because clients pay on the back-end.”

“Only the biggest companies could run campaigns like this before – now anybody can. Our CPA model helps make things accessible.”

The technology can also be used in the creation of display ads to be placed in web sites as part of a larger campaign. Those ads, like the landing pages, can be built on the fly from a database of elements hosted by OnDialog/Site Tuners and placed via Hydra. The more successful ads (and elements) are then used and enhanced for future placements over the duration of the campaign.

Hydra’s partnership with OnDialog positions the ad network as one of the first adopters of this kind of technology. “We’re thrilled to be working with OnDialog as this partnership further builds on Hydra’s suite of services for maximizing campaign performance,” said Zac Brandenberg, CEO of Hydra.

So, what does all this mean for marketers? Well, it looks like it could be a significant breakthrough in the world of online advertising. The ability to test literally thousands of variations of your landing pages and ads and then review the data and make creative decisions as a result is significant. The thought that this kind of service would be offered on a “use it first, pay us when we perform” basis is outstanding.

One word of caution, though. Companies that provide marketing services on a “per inquiry” basis don’t do it out of the goodness of their heart. They’re experts at what it takes to make things work and they expect to be compensated appropriately for it. This caveat is issued in two, primary areas:

• Creative ownership of campaigns and landing pages is too often given to people who don’t understand how or why things work in the world of advertising or web development. Hydra, for example, has their own creative team who understand how to get customers to engage, where links and buttons should go, etc. Let them do their job!
• From a cost standpoint, remember that nothing is ever, really free. The back-end fees for a CPA campaign like this may appear large when compared to other ad options – but remember, you’re paying for results here. Be prepared to provide some money into an escrow account (in some cases) to reassure the service provider (no matter who it is) that you have the funds to make payment in the event of success.
• Also, I’ve run “per inquiry” campaigns where a “minimum fee” was expected in the event the campaign under-performed. Realize that there are fixed costs to any campaign and some providers may require it.As a special note – I did not discuss either of these financial points with the folks from Hydra, so please don’t misconstrue my observations as a reflection of their policies or practices.
   
• And finally, if you’re considering using a service like Hydra or any other kind of “per inquiry” marketing program, it’s vitally important you understand what the “lifetime value” is of a customer relationship.

Do you know what a customer is really worth to you?

If you don’t know how to figure that out then it looks like I’ve got more blogging to do, doesn’t it. We’ll cover that later on next week.