Chris Dessi - Vice President zanox, Inc

The Fatal Flaw of Pay for Performance

By Christopher Dessi, Vice President of Ad Sales for zanox, North America

The Harvard Business Review, however interesting, is not always at the top of my reading list for a seven-hour flight to the UK. I’m more of an Esquire kind of guy, but I recently relented and forked over the cash for good old HBR (I still bought an Esquire to keep me entertained). While flipping through the articles, it struck me that the issues discussed on those pages transcend industries and are widely appealing because they affect any business. The contents seemed to be custom produced by writers that perhaps had been listening in on my team meetings and brain storming sessions over the past six months. This reminded me that some dilemmas – strategic, operational, motivational and ethical – are universal.

One piece in particular sparked my interest immediately, as it resounded for the performance-based online marketing industry yet had little to do with it. Odd. The title of the article was something along the lines of “The Fatal Flaw of Pay for Performance.” I immediately devoured the article, quickly realizing that it had nothing to do with online marketing. It was, however, fascinating and perfectly applicable.

The article discussed how rewarding a CEO for performance may satisfy certain critics so they don’t get swept away with backdating stock options, or the like. One of the main points addressed in the piece, which I felt was perfectly appropriate for our industry, is that when people (or in our case publishers/affiliate marketers) are rewarded for performance only, there is a fatal flaw – the temptation to cheat.

We open the system up for fraudulent activity because the one responsible for performing is so desperate to meet a certain benchmark that they loose site of the bigger picture. The article listed examples of CEO’s who had “cooked” the books. In my mind, I thought about rampant fraudulent leads I’ve seen over the years – affiliates forging applications, entering fake emails, even using stolen credit cards – all with the intent to be paid for performance.

The bottom line is, however appealing it is for advertisers, if not properly regulated, this model is flawed. You don’t want a CEO to be rewarded for something he or she didn’t really do. Nor do we in the performance-based marketing industry want to reward someone for performance they didn’t achieve on behalf of our advertisers.

The model shouldn’t be just pay for performance, but rather pay for performance with integrity. Let’s be honest though, there are too many affiliates and publishers to cut out all of the shady guys. So, how do we solve this dilemma? The first step is to be AWARE of the issue, and then monitor, regulate and participate.

Once you’ve recognized the existing threat, it’s important to monitor your affiliates and the manner with which they generate leads for your advertisers. Have a task force assigned to not just monitoring, but identifying and then terminating the relationship if the publisher is seen to be doing anything out of the ordinary. It’s also crucial to regulate the publishers that join your network. It’s your integrity as well as your advertisers’ at stake, be in charge and lay down the law. Finally, participate in removing these publishers actively as well as educating your advertisers about the pitfalls of pay for performance (i.e. Don’t allow incentivized traffic on lead generation offers).

My trans-Atlantic encounter with HBR ultimately reminded me that pay for performance is flawed – a dilemma that echoes across all industries. For those of us in performance-based online marking, particularly affiliate marketing, it should be clear that pay for performance with integrity is always better, albeit difficult to execute, and therein lies the differentiating factor for the best networks.

A Shameless plug of my article that appeared yesterday in DM News.

Christopher Dessi
VP of advertiser sales, North America, Zanox

Some advertisers flinch at the idea of affiliates generating results on their behalf. No matter what doubts you may have about affiliate marketing, the exciting reality is that it has proven to be effective.

If you don't employ affiliate market­ing tactics in your e-marketing strategy, you're missing out on new markets and a guaranteed expanded workforce at no cost. For example, if you decide to partner with a network that offers inter­national affiliate reach – you now have an instant international e-marketing strategy. Similarly, if you allow search affiliates to proactively bid on search words – you've now just penetrated the search market, without internal staff and at zero cost to you.

Once you have decided to leverage affiliate marketing, the next step is to select a preferred partner. If you ask these four questions before you move forward, you'll find an affiliate market­ing partner that is significantly more valuable to your organization.

First, is your affiliate network trans­parent? As larger brand advertisers start to spend more money with networks, a real need for transparency has emerged.

Ask if you are obligated to pay for the conversion when a pixel fires. Savvy networks rely on delayed confirmation of a pixel firing. Then, look for a part­ner that offers international reach.

Finally, ask your potential partner if it will allow your company to work with other affiliate networks. If a partner is attempting to lock you into a contractual obligation of exclusivity, they're only limiting your market reach

Recently we've been seeing a lot of chatter in the media about a pending recession. Some may argue that the recession has already hit, and that it's only going to get worse. Pending events like the US Presidential Election, coupled with the Bejing Olympics are top of mind as well.

I feel that performance based online marketing/affiliate marketing is recession proof.
Let's think about this; if you're currently spending money online for your company you certainly understand that there are numerous ways in which you can aggregate new users/viewers etc. You can purchase media on a CPM, CPC, or CPA. If you're currently working in a CPM scenario and you have a budget that can handle that, great. But what happens if that budget is directly effected by a recession. You'd be forced to modify your offering to performance based only. This would entail your only paying for a paid conversion, or a user (depends on how you'd prefer to define an aquisition).

In this manner of advertising you're still spending ad dollars, but only if you're making money yourself. If you've done your homework, understand your allowable aquisition rate, and can back into the appropriate metrix....then you're recession proof!

There, I said it. All online advertising should be performance based, period. For years I have been working with clients, and agencies alike all trying to make sense of their ROI online. At first we had the CPM model. During my time at Mediaplex, before it was a Valueclick company, and before the Ad Agencies saw them as a threat to their own in house media planning and buying teams, CPM was king. There were a few (to state mildly) issues with buying ads in a CPM scenario back then. Each third party ad server thought they were tracking impressions appropriately. Why was this a problem? Because if you're an advertiser in 1999 and your using (for example) both Mediaplex, and Doubleclick to serve your ads, you may be paying $.33CPM for one and a $.44CPM to another. This may seem like pennies, but when you're dealing with billions of impressions, the dollars start to ad up.

Back then this was OK....well sort of...that is until guys like Adam Gerber at The Digital Edge (Y&R) would start to ask questions about the impressions that he was purchasing on behalf of his very large, very demanding clients. I can recall Adam stopping me in the halls of the Digital Edge shoving a finger in my face, and saying "I want answers"....well the reality was that I had none for him. We didn't really know if an impression was served or not. We could only assume based on certain variables. We could provide reports, but we could track that back to a sale. Some of the campaigns were strictly branding campaigns, which is great, but branding for who, how were they measured? Obviously this was a very qualitative not quantitative approach.

Then came CPC, and all was good in the world. Or so we thought. That is until fraud started to pop up.

Now we have CPA, or CPL, and this is the only manner in which an advertiser can actually track conversions. Why are you advertising online? To generate a conversion, whether it be a lead, or a sale...performance is the next step in the evolution in online marketing. Even in a branding exercises you need to track the conversions. If a click on a banner lands a user on a landing page, you want them to take action, not just view your landing page. If they view your banner, really how much "branding" is occurring? How can you quantify that? You can protect your brand by demanding you work with a transparent network, or you can protect yourself from fraud by demanding that you will only pay for a conversion after you've been able to confirm the pixel that's fired, but you really can never quantify online advertising unless it's performance based.

Another Ad:Tech in New York has come and gone (at the speed of light, as usual). It's Friday morning, and I'm still feeling the effects of a crazy few days, but I have to admit it...I LOVE this show. There's really nothing better than getting out there and selling. I eat it up. I love meeting new people at Ad:Tech, seeing familiar faces, and course I get a kick out of the sheer volume of people in attendance. This year was unprecedented. The numbers vary, but suffice to say...there were a LOT of people packing into that New York Hilton. I joked with a few colleagues that the families that were in town on vacation must have been horrified to see all of the meetings being conducted in the lounge, lobby, restaurants, and surrounding establishments. It got to be so crowded that I even took meetings standing in the lobby. Two of those meeting were with large partners (it's a good thing that I can also call them friends), and we all had a good laugh at it. "welcome to my office, please stand here" :-)

AzoogleAds generated sufficient buzz at the booth as we continue to grow and gain market share. We poised to have another break out year in 2008!

Some of the best fun happened after the show when an colleague and I shot our video for our iMedia Spot (keep an eye out for it)! I'm certainly not an actor, but Audrey Breheney one of our Sr. Affiliate Managers is an Actress as well as an industry pro, so she added a sense of professionalism that this cheesy sales guy just couldn't muster! It was a ton of fun, and we can't wait to get it out there!

Looking forward to hearing from everyone about how they felt Ad:tech was for them.

All the best!
Chris Dessi
Director of National Ad Sales

AzoogleAds Branches Into SEM with Bazaar Acquisition
By Fred Aun, The ClickZ Network, Oct 2, 2007

In an effort to morph AzoogleAds into more than just a performance-based affiliate advertising specialist, the company has acquired Bazaar Advertising, a San Francisco search engine management and advertising player whose technology impressed AzoogleAds’ executives.
The decision to go beyond its niche in CPA-based affiliate networking has already proved fruitful for the New York-based company, said chief marketing officer Michael Sprouse. He said AzoogleAds, which handles affiliate advertising for Blockbuster Video, recently convinced the movie-rental giant to also use it for SEM.
“That’s really the one that we are most excited about so far,” said Sprouse. “We work with them in our affiliate business in big way. After a period of a few weeks, we really proved to them that we could manage their search as well and we are already in the process of running these campaigns with them.”
AzoogleAds also now offers media services, said Sprouse. “We built out a media buying team internally and we are doing media buys for a handful of pretty big clients. A lot of this stuff is in the early stages and we’re really excited about it.”
But when it came to search engine management, AzoogleAds decided acquisition, rather than internal expansion, was the better route. Sprouse noted Bazaar, a company that had about 20 employees, had “mostly small players” as customers, so the acquisition wasn’t about buying a client list.
“It was really a technology and optimization play for us,” he said.
Terms of the acquisition were not revealed, nor would Sprouse talk about new clients, other than Blockbuster, of the firm's fledgling SEM practice. AzoogleAds now has about 120 employees and offices in New York, Toronto “and now San Francisco,” said Sprouse.

Ok, so I have to confess...I had a very embarrassing, yet funny experience the last time I went on the road for business. I've put up a few posts about the Internet Retailer show, and I've been debating if I should blog about this particular experience for a few reasons (you'll realize why if you keep reading)....so there I was....all sorts of excited for the Internet Retailer show in San Jose.

For a few different reasons while on business we all bunk with a co-worker. Now, at first blush this may seen like a nightmare scenario for some people. What most people don't realise is that at Azoogleads, we're like a family...seriously. We've all grown very close over the past two years that I've been here (for a few reasons). Not the least of which are: Explosive growth, phenomenal success, and lots of really bright, high energy people that are respectful to eachother at all costs. One major factor that has helped keep this company so glued together has been the shared loss of a co-worker and friend (Jai). We've learned from that loss, and grown together.

So this time around, I was all set to bunk with Tom Barbaro. Tom is an all star at Azoogleads. Tom happens to be a great friend of mine, so I was looking forward to handing out with Tom at the show. Our first night in California, two other members of the team had flown in from New York Chantelle White, and Karen Aquilino. We all met for a nice dinner, then off to bed to rest up for the busy days ahead (Internet Retailer show starts at 7am!!) so factoring jet lag into that equation made me head straight to bed.

When I got back to the room, Tom had already settled into the room, and was getting ready for bed (he had a later flight in from NY). We set our alarms, and off to bed (I told Tom I would get up a bit earlier so we could stagger our shower taking). I woke up (after hitting snooze a few times)...and hit the showers. I shaved, and started my morning routine. I was ready to go, this was going to be a great show. I had a great team along with me, and had set a big meeting with Netflix to dovetail into my time at the conference. As I was thinking of all these great things, a little thought kept creeping into my head "man, I am so tired...that jetlag is killing me!" as I turned the corner coming out of the shower (shaved, hair combed etc.), I gently said to Tom...hey buddy, time to get up, we're running a little late...(my clock said 6:30am, and we had to meet the girls in the lobby). Tom sat up, looked at me like I had nine heads and said "It's only 3:30am!" I stood there in the dark, towel on, shaved, hair combed, clean as a whistle....at 3:30am.....PST.....oh.....my.....GOD.....I forgot to change the time on my Blackberry.

So...red-faced...I crawled back into bed for 2 hours. Much to my relief I was able to get off to sleep quickly, and didn't really feel that horrible during the show. The only issue was that (since I'm VERY Italian, my normal 5 o'clock shadow would be showing up at an un-godly 2pm that day....oh well...live and learn....

If you can't laugh at yourself....right?
:-)

While I was out in San Jose for the Internet Retailer show, I spend some time with Zenith Optimedia. We had a great meeting discussing where AzoogleAds may fit into their media buys on behalf of a few different clients. The main theme of the conversation centered around what the media planners had to do in order to make working with Azoogleads make sense for their client. They were intrigued by the fact that everything we do as a company is performance driven.

What does that mean to your advertiser? Essentially what your looking at is a risk free endeavor (hard to believe, I know). But think about it, don't you agree that this is the direction all online advertising has been heading?

Back when I was at Mediaplex we were selling CPM to large agencies on behalf of their clients. This didn't work because the media buyers had to show ROI. This was difficult because they couldn't quantify an impression. There are numerous limitations to tracking impressions as we all know (caching etc). Then there was a move to CPC, and this too had it's limitations with click fraud etc. The natural progression has led us to CPA advertising, where the "A" can be anything that advertiser wishes it to be. It can be a lead, or it can be a sale. All we have to do is place a pixel on the confirmation page. This way we can track the conversion on behalf of the advertiser.

Sometimes this doesn't really work for an advertiser. Sometimes the advertiser may have too many SKU's, and working with us will only make sense if they are using us to drive leads for something promotional, like a sweepstakes.

Please feel free to call, or email me with questions/comments.

Best,
Chris
212 308 8509 x 3242
chris.dessi@azoogleads.com

Recently I've been tasked with working with more Branded advertisers, and we've had tremendous success. As a company we define "branded" as follows:

Any company the Executive team deems recognizable with critical mass of positive sentiment. The Executive team’s judgment should be in accord with our Board of Directors, Staff, Current and Prospective Clients.

Our current branded advertiser relationships are very strong, and growing daily.

Agencies (or Parent Companies)

Initiative Media
Bausch & Lomb

IAC
Bagsbuy.com
Shoebuy.com
LendingTree
Cursors
Zwinkys
Webfetti
Fun Cards
Smileys

Tranzact
Sirius
New York Times
Prudential

ZenithOptiMedia
HP Snapfish

Direct Relationships:
VistaprintBlockbusterFTD FlowersStamps.comScholastic – Disney and Dr. SeussColumbia House BMGKraft – GevaliaMonster.comSunRocketGE Money
Earthlink - PeoplePCOmaha SteaksWeb.comNetflixNutrisystemDoubleDay Entertainment –ITT

Recently we've singed contracts to be Blockbuster's Search Agency of Record for their search endeavors!

About 5 months before Google went public, I had a very interesting experience. I had been working at AGA, a creative design agency that develops catalogs brochures etc. AGA is a great company, and I loved working there. I had just come back from a phenomenal year in London that had been hugely successful for me as well as the AGA. I came back thinking I could conquer the world (in my mind I had).

My first order of business when I got back to NY was to get my life back in order, and try to recapture the life I had before I went to London.

That wasn't going to happen. Things got better! I met my (now) wife Laura!

Things were looking great for me. I was at a job I loved, met a great girl, and I had just started interviewing at GOOGLE! Wow! I thought I was a shoe-in. Three years earlier I had worked in the interactive space at a company called Mediaplex. I yearned for those glory days of the Internet. I missed the face paced environment, and the speed of light business that occur ed. I have a Masters of Science in Direct Marketing from New York University, international sales experience, and all the confidence in the world!

I spent a long time preparing for my interviews, and thought that each time I met with the team at Google, that I was certainly going to get the job offer. There was even a series of odd coincidences that I thought pointed directly to my getting an offer. I ran into an old college friend at my first interview (actually DURING the interview)!

I was sitting with the HR person, when her paper blew off her desk (they had a great deck at the former Google offices). When I got up to get the paper I saw my friend! She was just as shocked to see me, as I her! We exchanged pleasantries, and she wished me luck! WOW! If they highered Meghan McGarry, and she and I went to the same school, Loyola College in Maryland (even if only for a semester, because she transferred to the University of Connecticut)! Well... this was EASY!!

Not so fast. I had just started the arduous task of numerous interviews at Google. They don't get the creme of the crop for nothing. They take their time, review, and review, and review. They taped my sales calls with them to analyze my pitch. This was not easy for me. I felt as if I had been "out of the game" for a bit. The sales process at AGA was much slower, and things were NOT closed over the phone. I was the king of face to face meetings.

After my first few interviews, I even found out that the woman that had been organizing all of my interviews at Google (Sandy Feigenbaum) was a college friend of my wife Laura! At the time Laura and I had just started dating, were in the midst of falling madly in love, and I had mentioned her to Sandy on more than one occasion (before I even knew that they knew each other)! Another odd cooincidence in my favor!!

Long story short, after 7 interviews, two taped over the phone (apparently the final taped call was a tie breaker between myself and another candidate), I was not offered the job.

This was the BEST THING THAT HAS HAPPENED TO MY CAREER!

If I had not been turned down by Google, I would have not been where I am today. Currently I am the Director of Sales, Northeast Region at Azoogleads, Inc.

I have had such a phenomenal time at Azoogleads. I was the 3rd person to be highered in the NY office, and we currently have close to 40 people in that same office! My thoughts are always on the positive, and my life is abundant. For a long time, I held onto negative feelings about my experience with Google. Now I can look back, and say that they had made the right decision. Before coming to Azoogleads, I made a brief stop at Responsys. I was selling software, and was working from home for a short period of time. I grew tremendously during that job, and I feel that I needed to mature as a business person. I have been lucky to have met the people I have since my Google experience, and I hope that this story can inspire others that may not see the "silver lining" of a seemingly bad situation.

Have a great day everyone!

"All that we are is the result of what we have thought"
-Buddha