There’s been a shift in the trade winds across the advertising industry in the last few years and the gusts are starting to come into our shores at an alarming rate now. Tighter economies lead to tighter waistlines, at least in the budget metaphor and what was once standard operation procedure goes out with a new way of thinking.
The shift I’m talking about has to do with advertising models. The economy has forced brands to find more efficient ways to get the word out. Spend less, while doing as much, or even more. And while that makes perfect, smart business sense for the brand in question. The impact that tightening has on the services, agencies, vendors and media channels isn’t around the waist. It’s around the neck.
More and more brands are insisting on cost-per-performance ad models. You may also hear them referred to as cost-per-acquisition approaches. Or, if you want to get down to the pedestrian level and call a spade a spade, it’s basically affiliate marketing.
If an influencer. Or a podcast. Or website. Or any other advertising channel helps the brand make money, then and only then, do they get paid. Conversions are the key. Measurement and attribution are most crucial. But if my audience clicks on my link or uses my code upon checkout, I make a commission off the sale.
Pretty simple, right? Pretty fair?
You brand folks are probably saying yes. I’m saying no. And not only is it not fair. It’s borderline criminal.
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Falls Commentary Transcript
Hello again friends. Thanks for listening to Winfluence, the Influence Marketing Podcast.
There’s been a shift in the trade winds across the advertising industry in the last few years and the gusts are starting to come into our shores at an alarming rate now. Tighter economies lead to tighter waistlines, at least in the budget metaphor and what was once standard operation procedure goes out with a new way of thinking.
The shift I’m talking about has to do with advertising models. The economy has forced brands to find more efficient ways to get the word out. Spend less, while doing as much, or even more. And while that makes perfect, smart business sense for the brand in question. The impact that tightening has on the services, agencies, vendors and media channels isn’t around the waist. It’s around the neck.
More and more brands are insisting on cost-per-performance ad models. You may also hear them referred to as cost-per-acquisition approaches. Or, if you want to get down to the pedestrian level and call a spade a spade, it’s basically affiliate marketing.
If an influencer. Or a podcast. Or website. Or any other advertising channel helps the brand make money, then and only then, do they get paid. Conversions are the key. Measurement and attribution are most crucial. But if my audience clicks on my link or uses my code upon checkout, I make a commission off the sale.
Pretty simple, right? Pretty fair?
You brand folks are probably saying yes. I’m saying no. And not only is it not fair. It’s borderline criminal.
And I’m going to explain why today on Winfluence.
This episode of Winfluence is presented by CIPIO.ai where you can create a consistent flow of authentic user-generated content to fuel paid, earned, shared and owned campaigns that set your content marketing on fire! One of the main methods of doing that is by shifting your influencer marketing focus to a Community Influence Marketing one. That’s where you discover the influential voices in your own community of customers, fans and followers, and partner with them to create authentic content that recommends your brand.
We’ve published a brand new ebook called The Marketer’s Guide to Community Influence Marketing. It’s a step-by-step manual that shows you how to do it. The result is a more cost-efficient way to engage creators and drive word-of-mouth marketing while capturing better-performing content for your paid and owned social media efforts.
Download the free guide by visiting getcipio.ai/guide … for those of you watching on the stream, I’ll throw up a handy QR code you can scan to get there.
And folks, this isn’t just a 2-3 page quick guide. This is a fairly hefty eBook written by yours truly, detailing how you can leverage Community Influence Marketing to drive growth in your brand.
GetCipio.ai/guide – Download the free e-book and start engaging your community today.
Cost per performance is becoming chic in advertising. And those that are pushing for it are walking a fine line of being guilty of a crime. I’ll tell you why … NEXT. On Winfluence.
How do you model advertising purchases and value? Let me count the ways.
The alphabet soup of how we measure the value of advertising and marketing purchases seems pretty straight forward. They’re all CP something … CPM is cost per thousand. Typically impressions. CPC is cost per click. CPE, cost per engagement. CPA is cost per acquisition. Which is also sometimes called cost per conversion (but not really called CPC since that’s already taken). CPA or cost per conversion is also grouped into its own little club called performance marketing these days.
There are performance marketing agencies and performance marketing strategies and so on.
Performance marketing is very popular with brands. In that model, they only have to pay the media channel in question if a sale or conversion can be directly attributed to it. You may also think of this as affiliate marketing where if you sell a $100 item and have signed up for a 15% affiliate commission on all sales, you get $15 and the brand gets $85.
With me so far? Pretty straight forward, right?
With that in mind, let me take you down a little side path. Most of you know that one of my side projects is the Marketing Podcast Network. You’re listening to this show on MPN right now. We have over 50 marketing related podcasts unified on a common server and hosting environment so that we can offer up advertising across the network.
This provides companies whose products are made for marketers, an ideal audience to advertise to. At MPN, we can say with confidence that 100% of our audience are marketers. Because all of our shows are marketing podcasts. So you’ve likely heard advertisements here recently for LinkedIn Ads, SEM Rush, the Creator Economy Expo and more. Those companies value you and the audiences of the rest of our shows and pay to advertise on our programs.
Ideally, MPN sells its advertising inventory on a CPM basis. We charge those companies a certain dollar amount per 1,000 show downloads. Your typical CPM rate is about $20. Because MPN has a higher concentration of a valuable audience for companies that market to marketers, our starting point for a CPM rate is $55.
What that means is if the advertisement for a sponsor on MPN appears in 10,000 downloads, we would charge that company $550 for the advertising exposure. The math is 10,000 downloads divided by 1,000, which is 10. Multiplied by the CPM of $55, which is $550.
By most traditional advertising standards, this is fair and right. It’s a concentrated audience of marketers, which are the ideal customers for these sponsors.
But remember at the top of the show when I told you the trade winds were shifting?
Cost per performance, or performance marketing measures have been growing in popularity. So much so that many brands are now insisting that everyone they do business with for advertising opportunities be run on a cost per performance, or cost per acquisition, basis.
What that means is for the Marketing Podcast Network, instead of a company paying $550 for the 10,000 impressions of their message, they would only pay us if someone who listened to their advertisement actually purchased their product. And if only one person did … we would only be paid the commission or referral rate for the one purchase.
See where I’m going with this?
Before I go there, let’s look at the merits of performance marketing. As I said, brands love it because they only pay if they make money. But media channels like influencers … podcasters … websites … email newsletters … television broadcasts … streaming videos … billboards … the people who run those aren’t as fond of performance marketing.
Here’s where the brand people say, “Well, if your channel doesn’t perform, then you shouldn’t get paid. We pay for performance, not failure to perform.”
But that is like saying “I’m only going to pay you for this hambuger if, after I’m done, I loved how it tasted.”
To better explain this conflict, think about how advertising works. The brand advertises its product and service. The marketing rule of seven states that a consumer needs to hear the advertisers message at least seven times before they take action. I’ve seen new research that suggests that is as high as 13 times now that we live in such a noisy world where everybody is a publisher.
In order to achieve the seven times … those seven impressions … brands buy radio and television media, print advertisements, engage in social media, send emails, send direct mails, buy billboards and more. The more the message is out there in more places to be seen and heard by the consumer, the faster they will get to seven and consider the brand.
This is why CPM or cost per thousand impressions has been a long-standing, understood and generally accepted model for the cost of advertising.
Performance marketing does hold the advertising channel more directly responsible for the purchase of the product. You might think that’s fair and makes sense. But wait …
If I value the impression because I need seven per person to get the customer interested in my product. But I’m only going to pay for the actual sale of the product. Then I actually don’t value the impression. All I care about is the last touchpoint and the purchase.
Which is to say, instead of a hamburger, you’d like raw ground beef on two uncut and uncooked rolls of bread dough.
You can’t get to the conversion without the impression. And one is not more important than the other. So, switching they way your brand values advertising from a CPM model or a CPA or performance model is paying for the supplies, but not paying for the labor.
And in most business scenarios, paying for only half of what you take, is called theft.
You don’t pay 50% of your dinner bill. You don’t stop car payments half way through your loan. You don’t get 1,000 units of your supply when you only pay for 500 of them.
Certainly, the seller in these scenarios can cut you a deal. They can elect to give you half of the product or service for free. But wanting it and shaping your market to force the seller into giving half of it away is why governments create regulations.
In more plain speak, you’re being a turd.
More and more brands are asking influencers to work on a cost per performance basis. More and more brands are asking the same of podcasters, who are also influencers. The message then is that brands don’t value your time. Brands don’t value your work. Brands only value your ability to sell.
And they don’t value the reach and frequency of message it takes to achieve that sell.
I am not saying that you brand-side marketers out there shouldn’t grade and hold your media channels accountable for driving sales. But to let that be the only judgment if to disregard the value the channel brings in awareness. In reach and frequency of message. I building curiosity, familiarity and trust for your brand, your product or your service.
If you are not willing to pay for the value those bring, you are stealing from the very channels that can sustain you. And when all the brands collude to do that, those channels that sustain you, die.
Pay podcasters for impressions and exposure and for reinforcing your messaging. Pay influencers for their time and talent and the value brought to you because they simply have conversations with their audience about you. Pay the ones that also generate sales more.
If you only pay for conversions. You’re asking the media channel in question to give you at least half of their value for free.
And in very few scenarios in life does that not amount to being criminal.
I would love to hear your thoughts on this. I’m sure plenty of you will disagree. Please fire up that voice memo app on your phone and record your thoughts. Send that file to me at [email protected]. If you do, I may use your response on a future episode.
If you don’t want me to do that either let me know or just email me at [email protected]. I’ll not use your response on the show without your permission.
And I know you know someone who might get fired up hearing this little tome. Share this episode with them. Send them to winfluencepod.com or the direct link to this episode which is jasonfalls.co/criminal.
Don’t forget you can now watch Winfluence every Monday morning at 11 a.m. ET, 8 a.m. PT on Facebook, LinkedIn, YouTube and Twitter. Just find me there … I’m JasonFalls everywhere.
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Winfluence is a production of Falls + Partners and presented by CIPIO.ai. The technical production is by MPN Studios. Winfluence airs along MPN … the Marketing Podcast Network.
Thanks for listening, folks. Let’s talk again soon, on Winfluence.