Step-By-Step Guide to Cost-Per-Revenue/Performance Ads
Your main concern with online marketing may be that you cannot attribute your profit directly to your efforts. In other words, you cannot calculate a return on advertising spend. The only way to directly attribute your online marketing efforts to revenue (outside of eCommerce or online booking) is by asking each new customer if he or she saw your ad. Unfortunately, this is a nearly impossible task. In addition, it is not efficient. Even if you tried, you would not get a direct answer most of the time. Luckily for you, the newest thing in small business digital marketing is the CPR, or cost-per-revenue, advertisement. CPR ads should be your brick-and-mortar business’ best friend. The reason they’re great is that you only pay for advertisements that result in in-store purchases.
The rest of this article outlines a step-by-step process of how cost-per-revenue advertisements work.
1. You create an offer online
You decide whether you want to offer a 5% or 20% cash-back offer. Although the decision is yours, we recommend finding your optimal discount rate based on your average ticket size. Since you will be posting your offer on a publisher’s site, you require a business account on the publisher’s site. Therefore, your online listings must reflect the correct information. After all, you don’t want somebody to see your performance ad then go to the wrong address or visit your business during closing hours. For a guide on how to fix your online business listings, click here.
2. An online publisher promotes your offer
With your business account up and running on the publisher’s site, you are now able to post-performance advertisements. The next step is the publisher promoting your offer so that consumers can see your offer. The publisher will promote your offer by serving your business’ listing AND associated offer as a sponsored result in the user’s search results.
3. A consumer links a card to an account
A consumer visits a publishing site, such as Yelp or TripAdvisor, and sees your offer in as a sponsored result. For example, imagine that you own a craft burger joint. You decide to offer a 10% cash-back offer on Yelp. When a consumer conducts a local search for craft burgers, your offer will come up at the top of his search results for craft burgers near me. Wanting to give your business a try after seeing your offer, the consumer will then link a credit/debit card to his or her account so that he or she can redeem the offer at your place of business.
4. Consumers visit your store
Now that the consumer has a card linked to his or her account, the consumer’s purchase will be attributed to your offer. All the customer has to do is use the card that he or she associated with his or her account when visiting your business. As a result, you will be able to see that your offer on the publisher’s site led to revenue of ‘x’%. Therefore, you will be able to calculate your return on investment as it pertains to your performance advertising campaigns.
5. Revenue is shared. Hence, the cost-per-revenue offer
When a consumer redeems a 10% cashback offer at your business, 10% of the total ticket price will automatically be deducted from your batch. In addition, a pay-per-sale fee will be deducted from the ticket amount.
Before the numbers worry you, let’s run through the math.
Imagine that you offered a first-time 10% cashback offer. For a $20 ticket, the 10% cashback offer will cost you $2. Let’s say that the pay-per-sale fee is an additional 3% of the total ticket price, which equals $0.60. By spending $2.60 on advertising, you generated $20 in revenue. Therefore, your return on advertising spend, or ROAS, was $7.69, meaning that you generated $7.69 for every dollar that you spent on advertising.
$7.69 is a great return on advertising spend. In addition, you gained a new customer whose lifetime value will generate revenue for you in the future.
The best part about cash-back offers, besides their low cost and high effectiveness, is the transparency and reporting that they offer.