re: ONLINE-ADS>> Sales Commission vs. ad revenue

Sharon Tucci (CEO_at_ergodynamix.com)
Sat, 20 Sep 1997 08:15:52 -0400

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>My company is interested in exploring the "pay per sale" model. In other
>words, a web site places ads, copy, emails its subscribers -- whatever --
>to acquire customers for my services and I track signups and pay out a
>commission on each sale.

As an online publisher (2 email distributed e-zines), we've experimented
with this model and have found it to be quite profitable for both us as
well as the advertiser. We refer to it as "joint venturing" since that
is, in essence, what it is. There are many things that need to be taken
into consideration - especially to make it an equitable arrangement:

1. The audience of the site or publication should be a good fit with the
product or service being advertised.

2. This type of arrangement puts the accountability in the hands of the
advertiser (vs the other way around in normal advertising).

3. Based on #2, there needs to be a tracking system in position where
both parties can be aware of what is going on.

4. There should be a checking system in place on the part of the site
or publication to verify reporting is accurate.

5. I haven't encountered any situations where it made sense for us to
go with something other than a straight-out sale. Accountability is
too difficult otherwise.

6. If you are marketing a product or service and wish to pursue this
type of arrangement, you should be prepared to give up a *good*
portion of the revenue generated. We've worked with anywhere from 20-
50%.

7. It is in the advertiser's best interest to negotiate a sliding
downward scale for payments or a cap. Whether a publisher will accept
that or not is another story :)

If you can put together a "winning proposal" and all of the pieces are
in place, there is no reason why you might have a chance at something
other than getting left-over space. One example: I was in correspondence
with a company that was interested in advertising, however, since we
were new, they were uncertain as to whether they should go ahead. I
proposed that we do it on a per-sale basis. The one ad that we ran
would have cost them $75. It directly resulted in over 800 sales (a
response rate of less than .3% on a per-view basis). The arrangement
was that we would get $20 per sale. They were happy. I was definitely
happy. If we could only work out more of these! <grin>

Sharon Tucci

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