Still don’t believe in the economic crisis so much. But yes this is a total commercial clean up. Is that bad? I guess not.

Further more I see indeed less spending at the moment. A lot of houses for sale etc. But is this temporary or a real trend? If it is one thing we learned from the whole crisis then it is that we are really bad in predictions. So if they now predict downturn..Maybe it is just a matter of a longer time to conversion after all.

In digital marketing I hear a lot about less investments. There seems to be a big opportunity for affiliate marketing because of the performance based model. Display ads and branding seem to have a hard time, but companies are used to these “reach”model for ages and they learned to never skip too much marketing budget in bad times. So they will think twice and spend a little less I guess.

For cleaning up however it is now time for analytics. While we are all waiting for new investments it is a good time to look at how effective our webpresence is in engaging, converting etc. In my opinion there is a lot to gain here.  Most companies where to busy spending in the past, now it is time to look at costs and ROI.

This is totally in line with the overall commercial clean up.

Performance based marketing can be really attractive for both parties. With the example of affiliate marketing and some tests I did myself I see some basics coming up which I like to share with you.

Performance based can be attractive because there is almost no risk. As a company you only have to pay a commission when a sale is made. For the publisher/sales person there is normally a higher reward.

Performance based solutions don’t suite all marketing campaigns though. Best is to keep in mind a sales agent you pay per sale.

You need a clear goal and clear tracking. If the goal is vague you can better stick to payment per hour or some other sort of payment. When a sales agent has to do all kind of side work he/she will feel this as a distraction if he doesn’t get payed. If he does get payed a company has often the feeling of paying too much.

Tracking must be good. When a sales agent gets the feeling his revenue is going to somebody else he will stop for sure.

The biggest disadvantage of performance based marketing however is time. How do you keep the sales agents motivated. They are investing time and do get a lot of interesting other offers. So there is a competition for the sales person’s time or attention.

This is were trust and incentives get in. And this is exactly the reason why you can do a lot of harm if you are going for a quick gain and forget about your sales agents/affiliates. Be careful you have a name to protect.

I do believe performance based marketing has a bright future. For anyone involved in advertising it is very attractive to pay per sale, per lead etc. in stead of just buying reach without any further guaranties.

Publishers have the opportunity to place ads while sharing the revenue. Customers get to see more relevant ads because ads that don’t pay will disappear.

Affiliate networks will however face a hard time to stay relevant. As tracking software will become free and available for everyone. Affiliate networks will have to compete with affiliate managers within the advertising companies to find and built relations with relevant publishers.

Why would you still pay the affiliate network if you can do it yourself.

Google is already offering Pay per Action advertising in beta and I guess it is just a matter of time before Google starts offering this tracking solution for non-Google ads as well (similar to Analytics campaign tracker). By then anyone can start his/her own affiliate program for free.

If the tracking software is for free. Affiliate networks will need to show their relevance by delivering better tracking and/or better publishers then we can find ourselves. In this situation they can’t afford to charge monthly fee’s. They will probably have to work performance based themselves.