Almost all of us are part of some continuity program, be it a gym membership, internet service, or Netflix. For many of these, we as consumers accept when the charges show-up, even if we might kick ourselves for allowing them to continue. Call their customer service center, and we will talk to someone on the phone. Send an email, and we will generally get a timely response. The same has not held true for other types of continuity programs, especially the free-trial versions that defined performance marketing this past year. Free-trial offers were certainly the high of 2009 but are starting off as the low of 2010. Networks have paid out millions of dollars that their advertisers have yet to pay them, and with most of that money being held up by a combination of merchant processors and the credit card companies, it might take some time before that money is seen. That being said, the free trial offers are anything but dead, even acai / ResV and teeth whitening have seen their shelf life extended by being ported to new markets overseas. The number of affiliates successfully making money on them though, has dwindled, but the lessons learned during the age of continuity growth will help us as we both look for the next sector of growth and work on keeping it healthy.
- Rapid Prototyping – it’s a commonly-used phrase for software businesses and more recently consumer oriented businesses working on crafting a better, or at least decent, mousetrap. This term gets bandied about when describing those companies who execute on an idea quickly, worrying less about perfection and more abut the learning that come from having something to market. It is used less frequently in the world of marketing services firms, but in many ways, it applies equally well. In the lead generation world, you might hear the term "speed to lead" as a critical factor of success. In the performance marketing world, it was speed to lead of a different sort. It’s how quickly can you figure out the conversion process, how quickly can you adapt a placement so that it makes money. Those in the performance marketing space tended to excel here, but they got really good at it this past year as they expanded beyond search and beyond social media.
- Quality Does Matter – quality means different things to different people, and it means different things to different advertisers. But, it’s a pretty basic and correct assumption to state that good quality makes advertisers happier than bad quality. In the continuity space, quality meant a customer that stays on longer than another yielding the company a higher lifetime value. As it means different things to different advertisers, it’s important going forward to first understand what makes for better quality and then to align one’s actions with it. Where the continuity space fell down is that for the most part, the advertisers didn’t adjust payouts by quality only by volume. The more you sent, regardless of how long they stayed, determined payout. That shouldn’t be the case, and in many other industries it won’t be. Already, we see lead generation offers taking root, and for them, quality plays a bigger role in determining price. In addition, they don’t collect payment information, so the intent of the user matters. In most cases, there will be a sales person on the other end of the form, so they will know whether what was sent to them was good or not.
- Precision Matters – the desire to convert leads to many good things, but one less than positive by product is the increase in imprecision, the all too common doing whatever it takes to see a conversion. In looking through various news articles pertaining to activities from the flogging craze, we read of one company who paid out several million in fines and upwards of $30mm in returns. While they no doubt made some incredible money, that is not the path towards long-term sustainability. Today, too many still do not appreciate the liability that accompanies marketing in certain verticals. It used to be that copyright infringement was the biggest concern, but today, instead of just copying a major brands likeness without permission, marketers make unsubstantiated claims. You can’t just put an "*" and say "We made this up" at the bottom. It’s something to keep in mind when making creatives and landing pages for highly regulated industries such as education as well as insurance and debt among others. The answer to increased scrutiny is not to test the limits more aggressively.
- Layaway Plan – speaking of large fines, if we look at the boom and bust cycle of performance marketing, where the boom is the period of time in which a particular trend leads to record after record month for a network, the bust is the period from when the offer starts running into headwind until the time it fades from the mainstream. We see it every 18 months to two years, and in each period, when the crap hits the fan, it gets cleaned up with green. For any newcomers in the space, don’t let the money get to your head, especially if you are operating in areas of high risk, be it sustainability risk or legal risk or both. Assume, that like a big house or vintage race car, that maintaining it will require large amounts of money for upkeep. The money you make today is not money you can spend today. It’s money you might get to spend in the future. Think of it as living in Britain and being paid in American dollars. If you think of your cash as half of what it really is, you will set yourself nicely to face future obstacles, which does not include any legal action, it just means having enough money to act during a correction.
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