The title of this article may sound like a broad sweeping generalisation (and to some extent it is), but to explain it fully, and to justify it, I need to explain in more detail exactly what I mean by "paying to advertise".
Since the start of the Industrial Revolution, technology has enabled business to work more effectively and more efficiently. And with the internet, the technology has created a huge change in the way businesses can advertise and market themselves to bring more cost effective results.
However, the vast majority of companies are still using 20th century advertising philosophies when they really don't need to.
Read on to see what I mean.
Let's look at the way advertising has always worked in the past.
A company is created to distribute advertising in some format, a newspaper, magazine, telephone directory, or any other basic advertising medium.
The people who created this company have taken a risk by setting up the company, and now they ask advertisers to take a risk by paying a fixed amount to advertise through their medium and hoping that the company can deliver the results they want.
The advertiser is taking a risk because there are no guarantees or assurances about the results they will get for their investment. Whether it works or not, the advertiser pays the same amount.
With traditional media, it's very difficult to do it any other way. It's difficult to accurately measure the response of traditional offline advertising and to charge based on that response.
However, the internet has meant that the response to online advertising can be much more accurately measured, and so can be charged accordingly. The advertiser doesn't pay for the advert, they pay for responses to their "free" advert.
This means that the advertiser is no longer taking the huge risk they were with traditional offline advertising.
The onus is on the advertising medium to produce the results.
The first measure of results that can easily be made is the absolute number of responses, ie. the number of clicks on the advert. This can easily be measured with very rudimentary software and can be verified by both parties, the advertiser and the advertising medium.
You can then pay a fixed fee for the number of responses (or clicks). This is known in the industry as pay-per-click (PPC) and is the minimum you should expect from a company asking you to pay to advertise with them.
After all, you've taken a risk creating your own company, why should you also take a risk on somebody else's company?
Google AdWords is one of the most popular (and most expensive) forms of Pay-Per-Click advertising.
However, it's possible to go a stage further.
Just because people are responding to your advert, that doesn't mean they are buying. You could still be paying a lot of money for all of these responses, but if they are low quality responses, you're still wasting your money. You are, after all, just paying for leads, not customers.
The next stage is where you don't even pay when somebody clicks on your advert. In fact, you don't pay anything until they become a confirmed buying customer and a sale is made.
So you don't pay for the advert, you don't pay for the response, or click, you just pay a commission on the confirmed sales. This is known as affiliate marketing, or performance marketing, and is one of the primary reasons attributed to Amazon.com becoming the world's largest online retailer.
Amazon.com pioneered this technology in the 1990s, which meant that they didn't need to waste money on traditional advertising, they just paid a commission on any sales that were generated from one of their affiliate adverts.
The technology involved is quite simple and can be used to pay a commission on direct sales through your website, sign-ups to your newsletter, contacts through your contact form, or any other measurable event or result.
OpenGlobal specialise in helping companies to promote themselves online and we always recommend using technologies such as these to make your online marketing more cost effective.
There is little point getting involved in the next big technology (ie. the internet) if you're not going to use the technology available to give you an advantage over the old methods. If you're going to just pay for advertising, you might as well do it through the old media.
The technology is there, so use it to your advantage.
Call OpenGlobal today on 0845 269 9624 to find out how we can help you to take advantage of these fantastic marketing methods to bring you the most cost effective results.