Balancing The Realities of P4P Trial Tension

We provide leads to clients on a pay-for-performance (P4P) basis. This arrangement doesn’t work with all businesses, so we provide short advertising trials to see if the lead generation will be mutually profitable.

Yet, there’s an inherent tension built in to the P4P partnerships we seek. On the one hand, we bring a productive mix to the table:

  • Marketing and testing experience
  • Ad technology
  • Data science
  • Artificial intelligence
  • Video production

The above outlines a few of the services we provide for the mutual benefit of sales growth for your company and ours.

On the other hand, the reality of how fast and in what volume the increased revenue will materialize is based upon a number of factors outside of our control. Two such factors represent key client obligations:

  • Converting the leads to sales
  • Operational productivity

And that doesn’t even include the fact that on our end optimizing the marketing and advertising is an ongoing process and the cost-per-lead is highest in the beginning until data science, artificial intelligence and continual testing start to point the way to more effective advertising.

P4P TRIAL-PARTNERSHIP REALITIES

In the short term, inherent tension rides along with the unanswered question: “Will there be enough sales to support both your company’s growth as well as the work we provide?” And to make the matter more complex, almost all clients believe the answer to be an inarguable “YES!” The good news is sometimes they’re right. The bad news for us is that sometimes they’re not.

The fact is, the amount of labor that can be invested to run innumerable marketing strategies and advertising tests to build and optimize a sales funnel to generate more leads/sales for less cost is an ongoing process that never ends. And yet some of the heaviest effort is in the very beginning.

The marketing and optimization process begins within the first month, but may not be mature for months, a year, or even a few years.

MARKETING AND ADVERTISING TESTS

There’s much in the way of testing that can be conducted:

  • headline testing
  • benefit testing
  • keyword testing
  • offer testing
  • price testing
  • guarantee testing
  • seasonal testing
  • ad format testing
  • image testing
  • story testing
  • all manner of video testing
  • and endless landing page testing

So begs another question: “How much labor should be executed now for an unknown payoff later?”

TO INITIATE A P4P TRIAL, OR NOT?

If the advertising shows great potential early on, then it makes sense to pour on the coals and invest more labor to increase sales as fast as possible.

If the advertising and partnership demonstrate below-average potential, then the sooner we bow out of the relationship the better.

But if in fact the real-world numbers demonstrate an average P4P remuneration, there’s always that nagging reality that we would be better served seeking greener pastures.

Or to put it bluntly, if a partnership doesn’t show proportional benefit for both sides of the arrangement, then the tension will inevitably stretch to a point that favors a break in the collaboration.

And usually it’s incumbent upon our end to initiate that severance.

Of course, since we are investing more labor in the initial trial than the client is investing media costs, we’re assuming the majority of risk. And typically, the trial is not going to be profitable on our end, even if it might be for the client.

But that’s not the purpose of the initial trial anyway.

PURPOSE OF A P4P TRIAL

The purpose of the initial trial is simply to evaluate real-world advertising and sales data to ascertain further partnership potential. From that data, we can extrapolate how quickly a profitable partnership might be realized.

That means for trials, in particular, the responsibility is primarily on our end to evaluate if it even makes sense to go through such a brief testing period.

If there’s enough ancillary data available that suggests that the probability of a trial will not be mutually productive, then of course we won’t initiate a trial at all. But that also means accepting that sometimes the data will not paint the whole picture and we will have missed a good opportunity.

What all this means is that if you receive a decline from Skyworks Marketing about proceeding with a P4P trial, please be aware that such a decline is not an opinion about the success potential of your business, but merely an evaluation of the short term probability for a win-win P4P partnership based upon our processes and models.