Pay for Marketing Based on Performance


I’m sure you remember in school the preoccupation everyone, including your parents had with grades.  Everything you did from homework, to studying for exams, to extra credit projects, or in rare cases the decision to cheat, was based upon making the grade.  Your entire future, you were told, hinged on your ability to achieve high marks.  And even though it may have seemed arbitrary, it was the teacher who determined if you had accomplished what they wanted and that you deserved a high grade.  Didn’t really seem fair?  It was our first real taste of life, now wasn’t it?

Advertising has traditionally been priced based on the model of how many eyeballs are estimated to actually see an ad.  The model of CPM (cost per thousand impressions) is the foundation for determining the value of ad time, placement, geography, location, space and medium.  But as David Koretz says, this form of pricing is doomed, in favor of a performance based model such as a cost per action (CPA) or a cost per conversion (CPC).  Although there are many arguments on either side of this debate, and this is good fodder for another blog, the concept of performance based pricing is not going to go away.

The marketing industry has struggled a long time with the concept of payment for performance.  The idea that the marketing firm should take the risk rather than the client is rather terrifying because it feels like too many things are out of the direct control of the marketing company.  What if the product being marketed isn’t that great and people don’t buy?  What happens when the economy goes into a tail spin and sales fall?  What if the CEO gets into trouble by doing something unethical or illegal?  What if……….  All of these are great questions.

My opinion, and I know it’s not going to be popular with others in my line of work, is that marketing companies and consultants should be paid (and fired) based upon their ability to perform.

This is my take and how I conduct my business.  I am going to make sure that there are clearly defined goals and expectations for all parties involved and that sound methods are in place for measuring progress.  I am going to put into place contingency plans just in case something unexpected happens.  And, I’m going to make damn sure that the product or service being offered by my client is good enough to be successfully marketed.  Lastly, if I am successful, I should be paid handsomely for that success.

Can you think of other products or services that we should pay for based only on performance?

You’re Regulated – Control Your Social Marketing!


We are now several years into the maturity of social media as an accepted form of marketing as evidenced by Shawn Kincaid’s post regarding Twitter becoming mainstream.  Many other articles have been written about the dangers to your business of refusing to hop on the social bandwagon, including one I posted.

As marketers we know that one of the most powerful aspects of social media is the two-way conversation that takes place, the ability to “listen” to what is being said about you, your brand and your products.  Never before have companies been in such an enviable position of being able to directly respond to comments made about them.  But, with this power comes the cost of losing control over your brand and marketing, something many have real problems with.

This is especially true in industries that are heavily regulated, such as financial, municipal and as Brian Morrissey writes, pharmaceutical.  I have spoken with many business owners and business developers from these industries that face similar concerns about social media and how they can engage without getting themselves and their company in a lot of trouble.  I don’t mean to say that their concerns are unjustified, and I would strongly recommend hiring knowledgeable legal resources who understand these ramifications.  As Brian states, the penalty for a social misstep can even go so far as to having your key product or your professional license removed from the marketplace!

As such, since these industries must maintain a firm control over their social interaction, even to the point of hiding their involvement, they end up being on the sidelines watching the rest of the marketing world heading forward at warp speed and leaving them behind.  Their marketing is stuck in a serious auto-pilot.

What this tells me is that our regulators, the ones trying so hard to protect us, are seriously out of touch with reality.  The kinds of restrictions placed on financial, governmental and pharmaceutical companies, and their ability to stay current in their marketing, is stuck in the 20th century.

As we all know from the many stories of celebrities getting into trouble, what takes place on the Internet is so transparent that it would appear the perfect place to allow the kinds of open dialog that is the essence of social media.  Would it not be acceptable for regulated industries to have that same level of transparency and be able to enter into constructive dialog with their customers?  I think the phrase is “trust but verify.”

I’d love to know your thoughts.