Response Magazine - February 2010

Media Zone
Per-Call, Per-Lead, Per-Sale —
Which is Most Effective?
By Peter Feinstein
Iwas deep in conversation with a prospective cli- ent when he asked me a question only two other prospects/clients had asked me in the past decade: “Would media outlets prefer to receive a higher
bounty for a sale or a lower payout on a lead?”
The answer: media outlets always prefer to be paid on
leads, or better yet, on calls. They don’t like being held
responsible for a call center or Web page’s ability to close
a sale. While they’re fine with being held accountable
for the number of calls or leads, they despise advertisers
who want to pay them per sale.
When we approach our media partners with a per-
call/lead/sale deal, they know that they are going to be
paid a specified amount per whatever it is we’ve told
them. So, whatever that ‘per’ is, the outlet’s only con-
cern is how many it is going to generate. While clients
think it’s cool to pay a media outlet $100 per sale, the
media think, “I’m probably not going to see much out of
this, so I’m not going to give them very many runs.”
When the sales report on the following Monday
shows only two sales, and we, in turn, report that to our
media partners, they tell us outright: “Yeah, that offer
was lame. We’re not going to run that offer any more.”
Now multiply that scenario by 100 media outlets and
you can see how quickly a per-sale program can fail.
Here’s the dynamic in full flow:
We give the per-sale offer to 100 media outlets,
paying $100 per sale.
They run the offer sparingly, because they don’t
think the call center can close many sales.
We get the sales report on Monday, and it shows
that there were only five sales — one each from
five different media outlets.
We now have five media outlets that managed to
eek out some revenue, while 95 get nothing.
As soon as we report those results, 80 of the out-
lets cancel the client’s runs, leaving us with 20.
The next week the same thing happens, but there
are only three sales.
When we report the
results, 17 of the remain-
ing outlets cancel. So we
cancel.
We give the client back
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his or her unused deposit, and everyone walks
away a loser: the client spent a bucket-load of
money on sales systems, call-center scripting and
more; we expended effort trying to get the media
to do something they weren’t that thrilled with;
and the media participated only half-heartedly.
A Winning Scenario
By contrast, when we do a per-call or per-lead pro-
gram, the dynamic is nearly 180 degrees different:
We give 100 media outlets a program that pays
them $15 per call.
The media decide to give it a lot of runs figuring
it’ll be easy to make the phone ring and get paid.
We get our call report the following Monday
morning and see that we generated 600 calls.
Of the 100 media outlets, 92 made money — and
they’re excited about running the ad even more
the next week. We tell the eight that didn’t get
any calls that if they give the commercial a few
more runs, they’ll make money. They say OK.
We have 100-percent participation for a second
week, and this time we generate more than 1,100
calls and make money for every media outlet.
Here’s the kicker: since the client’s call center
answered so many calls, the operators got a ton of
on-the-job training and closed more sales; their
conversion ratio went up by 2 percent, which
made the client more sales than expected.
Since the client made more money, it gave us
another $1 per call to pay to the media — which
allowed us to pay more to our current outlets and
attract new, bigger outlets.
The following week we nearly double our numbers
and the campaign goes on for more than seven
years like that. Everyone makes money!
This is an actual scenario — the kind of thing smart
agencies use to build business and, more importantly,
clients’ and media partners’ businesses.
If your business is looking to do a performance-based
program, don’t be so quick to fall into the per-sale trap.
Talk with someone who can guide you through the ben-
efits and pitfalls — so you don’t end up making a busi-
ness-ending series of mistakes. ■
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