Alastair Thompson talks to Jon Ostler of “The Performance Network”

The online advertising industry continues to mature with the launch of NZ’s first “performance-based” advertising network. The Performance Network (TPN), soft-launched in March this year by First Rate founder Jon Ostler, was, he says, “in response to demands by advertisers and publishers for new advertising options”.

Whether online publishers here have been loudly demanding the opportunity to be paid by performance only may be debatable, but CPC, CPA & CPS (cost per click, acquisition & sale) campaigns have obvious benefits for advertisers focussing on response metrics. Networks providing performance-based advertising are common in overseas markets (Clixgalore, Commission Junction, and FastClick) but until now options have been very limited in the NZ marketplace.

“In Australia, the US and the UK we commonly run clients’ campaigns with 10 different performance-based networks or portals, while in New Zealand we have been limited to just the Google AdWords network as the only real option,” says Ostler.

While Search and Performance campaigns are growing faster than CPM in other markets, NZ has remained CPM (purchase of page impressions) “heavy” by comparison.

“We’ve been slow to move budget from television to online in New Zealand and there’s a lot of catch-up to do,” says Ostler. “But current New Zealand [online advertising] budget allocation will move towards CPC and CPA. The pricing model and range of contemporary creative options, like data feeds, that we can now make available with TPN allows advertisers to run campaigns that would not be possible under the status quo.”

So, what is it?

The Performance Network is a system that facilitates and centralises the deployment of online advertising campaigns that pay publishers based on defined performance metrics only – typically clicks, registrations or sales. TPN provides the ad-serving with live reporting for advertisers on expenditure and for publishers on earnings.

Simply put, advertisers load campaigns and specify their budget, campaign period and payout method and the magic sales pitch is there’s no cost to load a campaign as all fees are on a performance basis.

So it all sounds perfectly agreeable for advertisers of course, but what’s the potential for the publishers who are, let’s face it, the key to the TPN offering?

“TPN essentially opens up new revenue streams for publishers that just haven’t previously been available,” says Ostler. “And it gives them the opportunity to monetise 100% of their inventory – all the time.”

Through a function called Ad Pools, campaigns are automatically optimised based on eCPM (earnings per thousand views) and ads are removed that are offering poor returns to the publishers in the network.

“It’s survival of the fittest. Running campaigns that simply don’t work doesn’t make sense for advertisers or publishers,” says Ostler.

Rather than erode the share of budget allocated to CPM campaigns, The Performance Network’s mission, apparently, is to increase the overall online advertising spend in NZ.

Ostler acknowledges that performance-based campaigns have a specific purpose and subsequent limitations. “Basing a campaign on CPC or CPA, by definition, is Direct Response focussed. Because the advertiser has little control over placement or timing TPN is not that effective for specific brand awareness campaigns. CPM on the other hand offers total control over media placement and allows high brand visibility.”

So far there’s been solid interest in The Performance Network, with initial publishers that include TRN, APN, ACP, and and early-adopter advertisers like Raboplus, Yellow Pages, Maui, Smilecity and Search4Jobs coming on stream.

“Performance campaigns are quite a different kettle of fish and do require a lot of new thinking and creativity. I’ve spent the last six years educating people on search optimisation and marketing and I think everyone now gets it. Hopefully performance marketing will not take as long!”

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