Smarter Online Advertising (part 3)

Need traffic for your business? I recommend The Online Economy.

If you’ve read parts 1 and 2 of this series, you know that samples and coupons have been the two cornerstones of Scientific Advertising for 100 years.

Samples, because they filter out the no’s from the maybe’s, and coupons, because they identify which customers came from which ads.

Both save you money on your advertising. Samples, by enabling you to stop targeting people who will never buy anything, and coupons, by enabling you to stop the ads that aren’t profitable over the customer lifetime.

Speaking of ad spend, there’s a third principle that becomes quite important when you are using samples and coupons in your advertising, and that is BILLING.

I talked about pricing of advertising in part 2, but billing is NOT the same thing as pricing.

Pricing is about how expensive or inexpensive your ads are. Billing is about what the price is in PROPORTION to (e.g. per click, per impression, per conversion) and WHEN you get charged.

Let me give you some examples of why billing is important.

In Scientific Advertising, 100 years ago, Claude Hopkins pointed out that print media ads tend to use a smaller font size than the editorial content around them, and for good reason.

It’s because print ads are billed based on the amount of paper space they take up, and with smaller print, you can fit in more copy for your ad spend.

Online advertising is rarely billed in direct proportion to screen space, but the principle remains.

If your ad is being billed per impression, you might as well use “click-bait” ad copy, because no matter how many clicks you get, it’s going to cost you the same. If your ad is being billed per click, you should write more judicious ad copy that only encourages the most serious prospects to click.

Another example that illustrates the importance of billing is affiliate marketing.

Affiliate marketing is possibly the most “Scientific” form of advertising of all, because it’s a billing arrangement made possible by the use of samples and coupons. It needs automated coupon codes to track customers back to their origin, and free or low-cost samples to trigger the payout to affiliates.

When I was an affiliate, one of my advertisers paid me approximately half of each sale (give or take, depending on each product) for the lifetime of the customer relationship. They were known to invest many resources into recruiting affiliates like me and training us to produce sales.

But there was something that I sometimes wondered about.

The advertiser had another affiliate relationship, in which they paid affiliates $250 for a sale that would only yield us about $45. The catch was that those affiliates would NOT get any more commissions for repeat purchases. It was $250 and that was that.

Why did the advertiser have two different billing arrangements, and which worked out better for them?

I believe the half-of-every-sale arrangement was better for the advertiser, because the only thing more important than profit is CASH FLOW.

The reality was, the commissions they paid us would average out to no more than $250 per customer anyway. Advertising is a competitive market, and there’s no way they could offer the other affiliates a lower price than they were offering us. They need to offer the highest price they can afford to compete with other advertisers.

However, they were able to WAIT longer to pay their bill with us than with the other affiliates.

No wonder they made so much noise about recruiting and training us, while keeping mostly quiet about the other affiliate relationship!

Some affiliates actually made better money with the half-of-every-sale billing arrangement, because they knew how to send leads that converted at an above average rate, but they were offset by the affiliates whose leads converted below average.

Plus, as part 2 of this series would have explained, paying out a percentage of sales meant that affiliates weren’t able to “game the system” by committing ad fraud or sending poorly targeted traffic to collect an early commission.

In short, paying for advertising only when you get a sale or conversion is:

  1. Better for your CASH FLOW, since it means your bill isn’t due until after you see your return.
  2. SAFER for avoiding losses on your advertising.

Obviously, this isn’t always going to work out nicely.

When you advertise with Facebook or Google, does Facebook or Google offer to bill you only when you make a sale?

Of course not! They will always bill you for every impression.

This may be better for THEM, but it’s not better for YOU.

That’s why the advertising service available to members of The Online Economy is going to give you the CHOICE of billing models.

On one hand, you will be able to pay a percentage of your sales, for a fixed number of guaranteed conversions.

On the other hand, if you have an unusually high conversion rate, you may find that it works out cheaper to pay per impression or per click.

While the PRICING will be set by us, the choice of BILLING will be yours.

For example, if you choose to pay per conversion, here’s how it would work. You would place an order with us for a fixed quantity of guaranteed conversions. You would pay your bill, and we would run your ad until you receive the quantity of conversions you ordered.

Here’s the catch. We can’t offer this to you YET, because the technology is not ready.

It’s still under development, but if an advertising service that offers guaranteed conversions interests you, there is a way you can accelerate its arrival.

If you want this technology sooner rather than later, you can sponsor the development. In return, you will be able to lock in an extremely low “early adopters” price for your advertising.

Just reach out to me to indicate your interest, and I’ll advise you of the next steps.

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© 2023 Ask Carlo