Alan See

The September 2009 issue of Inc. magazine showcases the 500 fastest-growing private companies. Forty-eight advertising and marketing companies are listed and a recurring theme among those organizations is a performance-based business model. In other words, the client only pays when customers take action. Pay-for-Call, Cost-per-Action, Pay-per-Sale, Revenue-Sharing, Profit-Sharing; make no mistake, performance-based business models contain elements of risk, and are taking center-stage in our current economy.

Well, “taking center-stage” may be overstated as the need to measure marketing performance has been a hot topic for several years now. Case studies that document marketing-return-on-investment (MROI) and articles covering the short tenure of marketing leaders who do not quickly deliver measurable results are numerous. So what’s different about the current trend? Traditionally, one might view the agency business model as low risk-low reward. This means that the advertiser pays 100% for all goods and services and then owns 100% of the resulting efforts. However, I’m sure there are several agencies who would argue that they have always been held accountable for measurable results no matter how the business model is defined. I’m also sure there are advertisers who would counter with agency invoices that they felt did not reflect a low reward trade-off.

All forms of advertising pose some risk, and no agency can afford to work for free - so we can’t hope to eliminate risk or reward in advertising. However, advertisers and agencies can negotiate with one another to find business models that represent acceptable levels of risk and reward for both parties. Performance based advertising isn’t for everyone and it’s not right for every situation; but given the current economic climate it’s worth exploring.

As the economy continues to sputter, many marketers are dealing with shrinking advertising budgets by leveraging performance-based advertising initiatives to help generate qualified sales leads. Pay-For-Call (PFC) is a performance-based advertising medium that delivers customer inquiries to advertisers via the telephone. PFC programs also help marketers reduce risk through greater accountability and measurement since advertisers only pay for leads that meet a minimum call duration.

Local service based businesses, including; automotive repair, plumbing, roofing and pest control are just a few that are most likely to benefit from PFC programs. The trick, in the above examples, is to match the service category with the prospect’s shopping research behavior. You want prospects to consider your company as a possible choice when they’re experiencing an event that requires the immediate use of your service category. Because print yellow page users tend to align their searches around life-events …

My sink is leaking … I need a plumber now!

the phone directory is remarkably well suited for pay-for-call. Of course, other advertising distribution channels, such as Internet yellow pages, search engines and mobile marketing can be used to launch PFC initiatives.

PFC marketing initiatives are not necessarily silver bullets for shrinking marketing budgets. You’ll still need to work closely with your PFC provider to agree on the metrics that qualify an incoming call as a lead, as well as the cost for that lead. However; given the current economic climate it’s a marketing program worth exploring.