Game Changer: Clickbooth Launches Consumer Demographic-Based Pricing Modifiers

Online performance marketing, as a vehicle for achieving unparalleled company growth and consumer reach, challenges businesses to rethink and redefine “performance”.  Advertisers, in our “big data” world, continually leverage performance-based data decisioning, but there’s an underlying value-alignment issue because pricing strategies have not kept pace with the times.  In fact, your current pricing strategy, the exact one you’ve have been taught to employ, is the equivalent of a wild goose chase.  We’ve listened and learned from our clients, and as a result, we’re excited to introduce a new level of performance pricing.

Why did Clickbooth develop an alternative pricing method for advertisers?

Traffic types within our industry are constantly evolving.  When determining where and how to acquire new customers, advertisers must understand the pros and cons associated with each traffic type.  Facebook traffic, for example, can produce widely varying results.  With proper targeting, it can lead to considerable volume and quality.  Conversely, with misaligned targeting, Facebook traffic can lead to poorly-performing customer lifetime values.  With this in mind, right-pricing a “Facebook” affiliate or link only works when that affiliate’s targeting stays consistent.  In practice, when setting an affiliate-specific payout for an affiliate whose media buying strategies and placements change, you’re always chasing a new acquisition value that corresponds to that affiliate’s current traffic targeting, or worse, in markets where key performance indicators are delayed, you’re always chasing a new acquisition value that corresponds to that affiliate’s previous traffic targeting!

A similar pricing scenario arises with Native traffic sources.  The value of a customer likely varies dramatically when comparing an acquisition arising from an older news site versus one from a viral site chock-full of endless slideshows.  

Same advertiser.  Same affiliate.  Same traffic source.  Different outcome.

Our clients are some of the smartest business owners on the planet and they’ve long recognized this pricing dilemma.  In some cases, advertisers have tried to remedy the inefficiency by providing top-performing targeting “recommendations” for affiliates.  Rather than relying on recommendations, we’re providing a better, more innovative solution.  Clickbooth advertisers now have the ability to modify payouts based on consumer demographics.  If your customer lifetime values are influenced by age, gender, or income level, your results are positioned to take a giant leap forward.  If you’re unsure whether customer lifetime values are influenced by these factors, don’t worry, we’ve also got you covered.  By leveraging Clickbooth’s revolutionary bid modifier feature, you can now build the data set necessary to establish a new standard of performance pricing strategies.

To leverage demographic-based pricing modifiers, do I need to ask my customers invasive questions about their age, gender, and income?

No.  As a marketer, establishing smarter pricing mechanisms shouldn’t come at the expense of offending your prospective customers.  By leveraging data you’re already collecting, Clickbooth’s innovative data integration solution helps you learn previously unavailable information about your customers.  Same consumer experience.  More valuable insight.

Does demographic pricing take the place of traffic type or affiliate-focused pricing?

Demographic-based bid modifiers enhance, rather than replace, your existing pricing strategy.  For example, we have many advertisers whose baseline offer payouts for email, display, social, and survey all vary.  For some advertisers, when taking into account varying consumer experiences through each traffic channel, those baselines should vary.  Additionally, within a single traffic type, an advertiser may utilize link-specific pricing strategies.  For example, if the value or volume delivered by Facebook link1234 exceeds the value or volume of “normal” Facebook traffic, advertisers, for years, have made one-off adjustments to further incentivize scale from link1234.  All of this still applies. Now, however, advertisers can modify their approach with an enhanced understanding of consumer profiles.  Let’s walk through a basic example.

An advertiser, ClickyCandy, sells hard candies.  ClickyCandy’s data analysis uncovered some meaningful profile discoveries.  For ClickyCandy’s product, the lifetime value of their customer increases as their customer meets specific age brackets.  To an even more meaningful degree, the lifetime value of a customer increases as the consumer income level increases.  ClickyCandy, to improve pricing/value alignment, created a modified payout structure that favors older, wealthier customer acquisitions.    

Below are ClickyCandy’s old and new email pricing strategies:

OLD

Email traffic: Baseline $12 CPA

NEW

Email traffic:  Baseline CPA: $10.50

Bid Modifiers:

Age:  0-24 years old = no modifier, 25-44 years old = +$0.45, 45+ = +$0.55

Gender:  For ClickyCandy, both Genders performs equally.  No modifier applied

Income: $0 – $15,000 = no modifier increase, $15,001 – $45,000 = +$0.90, $45,001 – $75,000 = + $1.75, $75,001+ = +$2.25

EXAMPLE A:

Consumer A purchases ClickyCandy.  Consumer A is 23 years old, earning $25K annually.

Old Cost of acquisition to ClickyCandy:  $12

New Cost of acquisition to ClickyCandy: $10.50 (offer level payout) + $0 (<25 age modifier) + $0.90 ($15,001 – $45,000 income modifier) = $11.40

EXAMPLE B:

Consumer B purchases ClickyCandy.  Consumer B is 40 years old, earning $90K annually.

Old Cost of acquisition to ClickyCandy: $12

New Cost of acquisition to ClickyCandy: $10.50 (Offer level payout) + $0.45 (25-44 years old modifier) + $2.25 ($75,001+ modifier) = $13.20

Consumer A carries a lower value than a “standard” customer for ClickyCandy. As a result, ClickyCandy pays less for a profile that matches that of consumer A.  Alternatively, ClickyCandy places increased value on a profile that matches Consumer B.  As a result, through ClickyCandy’s strategic bid modifiers, ClickyCandy increases their acquisition cost for Consumer B.  After all, Consumer B is a very desirable customer for the ClickyCandy business.  ClickyCandy supports a higher payout for that customer because they’ll return an increased lifetime value.

Who benefits from leveraging demographic-based pricing strategies?

Advertisers who understand correlations between changes in consumer demographics and customer lifetime values can benefit from using demographic-based bid modifiers today.  Fortunately, advertisers who want to leverage demographic-based pricing but don’t have the data set to make informed pricing decisions can also benefit today.  Rather than adjusting modifier pricing immediately, advertisers can enable the bid modifier feature and begin building a data set for future pricing strategies.  Knowledge is power and the learning starts today.

Can’t advertisers just set up a traditional revshare campaign?

Yes, but RevShare models don’t work for everyone.  After all, many advertisers lack the technical backend to facilitate the necessary value passing.  Additionally, many advertisers acquire customers without capturing the information needed to make demographic-based decisioning.  As a result, if demographics are meaningful to your CLV and your capabilities are limited because you either a) lack the technical capabilities to operate a traditional revshare model or b) need to obtain profiling data without directly asking your consumers for the data, you’re positioned to improve your acquisition strategies by accessing Clickbooth’s demographic-based bid modifier feature.

How do I get started?

Contact a member of the Clickbooth team to learn how you can get started today.        

What’s next?

Remember, your hurdles, successes, and goals help create our future products.  Our proprietary platform was designed with invaluable input from client thought-leaders.  The release of demographic-based bid modifiers addresses an inefficiency in the market and drives performance forward.  Let’s continue reshaping performance marketing and setting a new standard of excellence in 2018.  As always, we look forward to THINKING BIGGER together!  

Lee Aho

Author: Lee Aho

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