If you missed part one of this article, posted on Wednesday, visit 'Behavioural Retargeting & Affiliates - Chalk and Cheese?'.
A current list of Behavioural Retargeting (BR) companies are working on different metrics; some CPM, some CPC and some CPA. If BR is all about driving sales, why isn’t it pure CPA?
Matt Bailey: My view is that it should be done on a CPA basis. If the aim of the activity is to drive sales, rather than to achieve reach or branding, then it would seem obvious that you pay on a basis that encourages the publisher/retargeting company to achieve what they set out to do.
Clearly this places all of the risk with the publisher though, and therefore as a brand you lose some of the control you have as you need to offer them the freedom to optimise their own activity.
James Little (AffiliateFuture): Good question – and in my mind it should be. Obviously the answer that you will probably get is that in the places where these publishers are buying traffic it is pretty expensive, but from the surveys that I have read, the CTR is 3-4 times higher via retargeting ads and this is why at present we have decided, as a network, that any BR companies we work with we will only do so using the standard last click wins cookie and no PI at all.
If it is right for the affiliate channel then we feel that they should follow the same rules as other affiliates. I’ve no idea if we’re the only network to take this stance, but I do hope that others follow if we are.
Criteo: Publishers understand and demand the CPM metric for ad space. A CPC model is the best currency to ensure access to premium inventory and greater volume as it allows for optimisation in real-time. Ultimately we are all working to the CPA/cost-of-sale targets that our advertisers give us.
Without this accountability we would not be able to gauge the true ROI and advertisers would not continue with the activity. Criteo offers a performance optimisation platform that allows advertisers to change CPCs in real-time so they can always meet their CPA objectives, effectively making the CPA argument less relevant.
Hero Grigoraki (Webgains): Paying on CPA involves the use of PI cookies, in order to balance the risk the affiliate is taking by buying media placements on a CPM model. If the merchant isn’t comfortable with PI cookies or is unable to implement the technology, the payment model can be adjusted to CPC or CPM.
Furthermore, and as with all partnerships, the payment method reflects the purpose of the campaign – if the merchant is primarily looking for a branding campaign, then CPM is needed; if they want improved traffic levels, they will need to pay for that traffic.
Zak Edwards (Prezzybox): Good point, which is another "sticking point" when it comes to the validity of PI cookies. If the BR companies had total confidence in their solutions then why would they not operate on a purely CPA basis?
Laurent Gibb (myThings): BR is a hybrid marketing discipline which combines elements of both display advertising and performance marketing. In its infancy, BR was marketed as a premium display method and priced on a CPM basis. With more and more advertisers now expecting marketing costs to be tied to actual sales generated, online advertising methods, including BR are now seeing a shift toward performance based metrics.
As the pioneer of CPA based personalised retargeting, myThings strongly supports the industry’s migration to CPA based metrics. This being said myThings works in a flexible way and always in the manner that works best for advertisers and in some cases where an alternate model is required, such as CPC MyThings can also work as effectively. As with CPA, for CPC campaigns myThings always recommend that the advertiser tracks through an affiliate platform or a solid 3rd party tracking system to make sure there is no overpaying, sales duplication and that this channels is never looked at in isolation from others.
Kevin Edwards (Affiliate Window): From my experience the only companies I've had conversations with about working through the channel are looking to work exclusively on a CPA basis. If others are looking for alternative payment mechanisms then it's their responsibility to set their stall out why.
I think it raises a really interesting debate though about how we potentially should start looking beyond CPA rewards as being the only measurement of an affiliate's worth. With maturity so we should appreciate the extra branding elements all affiliates (not just BR companies) offer. Tenancies, CPC, CPM or indeed the intriguing concept of Cost Per Engagement are all areas that I think advertisers will be prepared to test the water with for certain 'brand partner' affiliates.
Frequency Capping – Showing retargeted ads too many times – will this cause a rejection of the brand, the product or even the Publisher's website?
Matt Bailey: If you are paying a CPA then you have to allow the retargeting company the freedom to operate as they see fit, within a fairly loose set of guidelines. I would argue that if you are transferring the risk to them, then subsequently asking them to limit their activity is a little rich.
If however you are working with a reputable firm, as most in this space are, then these concerns are minimal in my view. Whilst the retargeting company will seek to maximise their revenue, they will not do so at the risk of losing trust from the brands and publishers upon whom they are dependant.
Criteo: As with any form of advertising, too many exposures will cause people to switch off. Due to the highly relevant nature of personalised retargeting, it is even more important to ensure the correct number of ads are shown to a user to avoid banner fatigue. Criteo’s model is based on buying impressions on a CPM basis and advertisers purchasing clicks, therefore it is in our own interest to ensure users are only shown the optimum number of ads to ensure a high click through rate and ensure a positive brand experience. We will optimise people out once we know their propensity to click/buy is low.
Chris Bishop (7thingsmedia): I feel within the industry at times we are too critical of our own innovation based upon our knowledge of the mechanics. I feel it would be better to wait on a few user group studies before automatically assuming the general public feel they are being “followed” around the internet and the wider privacy issue – in an ethical context.
Since the evolution of personalised direct marketing it has only ever increased response or conversion rate – it's just now the technology has caught up. Is behavioural re-targeting not just "mopping up lapsed enquirers" from the old catalogue RFM days on steroids??
Hero Grigoraki (Webgains): Frequency capping is imperative for all campaigns based on banner impressions. It becomes even more important in BR campaigns, as the customer will start fearing they are being followed around and their shopping habits monitored. This will lead in bad perception of the advertiser’s brand, and could also potentially force the consumer to avoid the publisher’s website who serves those ads.
On top of frequency capping, we also advise merchants to seek time capping – how long after their visit to the merchant’s site do they start getting retargeted and for how long. These two safety measures ensure the consumer is targeted correctly and avoids any privacy fears.
The consumers need to be respected and not relentlessly bombarded with a merchant’s ads for the sole purpose of delivering a campaign.
Zak Edwards (Prezzybox): I don't think so. Why should it? Surely it will just be brand reinforcement. The only time I see this issue becoming prevalent is if the site my brand is being advertised on is a poor quality website (porn etc).
Laurent Gibb (myThings): As with any advertising method, over-exposure can have a negative impact on a brand. myThings makes personalised retargeting campaigns more brand and user friendly by working with a Cost Per Acquisition business model.
Most retargeting companies work on a Cost Per Click basis, so they make money whenever users click, creating an incentive to serve more ads to generate more clicks, sometimes with no capping whatsovever. Our technology actually optimizes ad serving in order to serve fewer but more highly targeted ads on better quality inventory, increasing users' positive interactions with the ads and avoiding over-exposure.
Sam Musk (Maxinutrition): Early feedback seems to show that this varies entirely from user to user. There is a risk that ads may start to feel intrusive but the contrary shows that targeted ads are useful to the user especially when searching or shopping through a cluttered category where you are looking for messages of points of differentiation between brands.
Retargeting companies will succeed when they find this optimum balance of timeframes and messages served plus the facility to turn off display units from specific advertisers. The last thing a brand would want is to switch off a potential customer if they feel push messages are engulfing them online.
Kevin Edwards (Affiliate Window): As the cost borne by BR companies is of CPM arbitrated to a CPA then they will be vigilant to ensure non or underperforming campaigns are pulled pretty quickly. There is no point in flooding a user with ads if they're unprepared to buy. That said it's definitely worth advertisers getting extra clarity on this to ensure there is no residual damage to their brand.
Do you think advertisers can benefit from BR and if so how what would be your preferred payment metric for them?
Matt Bailey: If I were a brand marketing manager I would be looking to run retargeting activity through the affiliate channel, paying a CPA and tasking the retargeting company to maximise their conversion rate and drive me as many sales as possible. I would closely monitor how they fit in with the overall customer journey to ensure that other channels and other affiliates were not being too adversely affected and that I was paying them the correct amount for this activity.
I would question whether I would pay them the same amount as other affiliates, as they have an inherent head start in targeting warmer leads, and I would work closely with them to feed back my findings in order to increase their learnings and therefore, their success.
James Little (AffiliateFuture): The payment metric should be the same as any other affiliate, although perhaps advertisers will want to offer a higher (or lower) commission based on the additional brand exposure and the overall performance stats, just like they would do with any other affiliate on the network who is adding additional value.
The biggest problem that the affiliate market has at the moment, especially in retail, is the pure lack of affiliates outside of the usual voucher/incentive affiliates.. this is why I feel it’s good that we’re seeing some new technology and innovation like this, but I do think that as an industry we need to be careful that merchants don’t get duped into doing something that will end up costing them a lot of money and providing very little incremental sales.
I posted a comment recently saying that BR is essentially the new (yet approved) version of spyware due to the PI issue and whilst I appreciate that it is quite different as it’s a lot more transparent, it is still potentially stealing sales that would have happened in the first place in its current form.
Criteo: Retargeting is an efficient and high-return solution for advertisers, to re-engage with their prospective customers through highly relevant advertising. Criteo calculates success using only “post-click” rather than “view-through” conversions. We have seen our clients’ click through rates increase by up to 600% with cost-of-sale consistently below industry averages.
Just like search, working on a CPC model and ensuring the cost-of-sale is below the advertiser’s target enables the best combination of volume and results for advertisers.
Chris Bishop (7thingsmedia): Absolutely. At no or very minimal cost, brands can efficiently expand their performance-based marketing within their already set up affiliate programme. We are all aware that individual channels do not work in silo's so holistically integrating all aspects, especially if to a CPA will drive both an efficient and highly effective media campaign as part of a wider acquisition and retention strategy.
As far as the preferred payment metric, I feel this still needs to be a case-by-case basis for the client. Naturally if the publisher is working to a CPA, after the testing phase the impressions might be limited to the networks that solely convert – rather than more traditional “awareness” based campaigns on a CPC, CPM basis.
Hero Grigoraki (Webgains): All behavioural-based campaigns can help increase conversion rate, improve revenue & ROI and therefore bring acquisition and retention costs down, as they are far more relevant to the consumer’s interests than generic campaigns. It’s definitely something that the majority of merchants are already currently looking to engage with and benefit from.
I believe advertisers will benefit from trialling out BR campaigns for 3-4 months, within their affiliate program, and evaluating the results. Once they have an understanding of how the provider can perform, they can make decisions to extend the campaigns or stop them altogether. Trials can be on a CPA model, in order to be more cost effective for the merchant, but if the use of PI cookies is an issue, then CPC can be applied.
BR is not for everyone – not all advertisers need it and not everyone will benefit from it. Unless the website receives a certain level of traffic to start with and can achieve a minimum conversion rate, then BR probably isn’t for them. For all others, a trial will showcase the potential it can offer.
Zak Edwards (Prezzybox): Yes. However, I think the payment metric has to be CPA, and I think the CPA has to be a LOT lower than with standard cookies. I can't see there being a huge uptake by merchants if the BR companies want the same commission to paid for a user who "might" have seen a banner to a user who has actually clicked on a banner.
Laurent Gibb (myThings): The benefits of BR for advertisers are proven. Recently, ComScore published a study demonstrating that retargeting outperformed all other leading online targeting techniques (including RON, contextual, premium placement and audience targeting).
Managing BR campaigns through affiliate networks provide advertisers with a single point of contact for their performance marketing needs. The affiliate network then handles campaign management, tracking and billing across all programs, including personalised retargeting. The advantages are clear.
As a company offering CPA-based personalised retargeting solutions, we obviously believe that CPA pricing is the business model that makes the most sense for online (BR) campaigns. The CPA business model directly correlated with the advertiser's industry, margins and average basket, and reflects actual sales and not only expected purchase intent (which may or may not eventually happen).
Sam Musk (Maxinutrition): IF you are in a competitive environment then retargeting should be on the consideration list, once a user has left your site retargeting can provide them with new messages or even specific offers to keep their interest. Time will tell what our preferred metric will be but the versatility of CPA is attractive here as ads can feature certain site events and individual products targeted to the user which we can reward via flexible CPA's.
Kevin Edwards (Affiliate Window): There's no doubt the technology is exceptionally clever and works for advertisers. If that was the only thing that needed to be proved the situation would be simple but as a network representing affiliates engaged in all aspects of online marketing we need to be sensitive to all demands. Certainly the feedback I've heard from advertisers who've trialled BR activity is positive and if this can be delivered to a CPA then at this moment in time I think that's entirely appropriate.