People inside and outside of the internet industry have been predicting the end of online incentive marketing sites for years. In spite of these predictions, the business has continued to grow. However, the last few months have seen a number of changes in the space. Many advertisers and affiliate networks have stopped accepting incentivized traffic, because of increasing issues with traffic quality. At the same time, the FTC has expressed concerns that some incentivized programs may be misleading.
Incentive programs aren’t exactly a new concept. Companies have been promoting their products and services with customer incentives for many years. You probably remember the classic bank promotion “open a new checking account and get a free toaster” or various ads offering people a month of gas or some other incentive for test-driving a new car. So, the idea behind the incentive site isn’t exactly revolutionary. What is different is the nature of the internet, which opens the floodgates to incentive marketers.
In an offline incentive program, consumers may actually have to visit a bank, car dealership, or other location to participate in the promotion. While these programs don’t generate overwhelming traffic, the people that come in are more likely to be good prospects. In the online world, incentive sites can draw tremendous numbers of consumers and give them one place to opt-in to offers from many advertisers. The positive is that incentive sites can generate very high traffic volume. However, the quality of that traffic may be questionable.
This tradeoff – volume versus quality – is the key to whether an incentive program is a valuable marketing tool or a waste of money for an advertiser. Incentivized respondents generally convert at a lower rate than consumers who aren’t rewarded for responding to an offer. So, the advertiser must look at all the factors, compare the ROI of the incentivized program versus other sources and determine which is most cost-effective.
Like any CPA marketing program, careful monitoring is needed to ensure that an incentive program generates positive ROI. We all know the problems created by click fraud for many online marketers. Incentive programs face similar challenges, when respondents sign up for offers with no intention of ever following through on them. There is nothing worse for an advertiser than paying for leads that have no interest in their offer and only signed up in order to qualify for some kind of incentive.
Often, the key to whether or not an incentive program generates quality leads depends on how the program is set up – the types of offers being promoted, the incentives that are provided to respondents, and how many steps are involved for a respondent to actually qualify to receive or earn the incentive. The process involves a careful balancing act for incentive marketers. Just like any business, they need to make a profit.
If the reward has little value or appeal to most consumers, then it won’t produce much traffic for advertisers – or revenue for the incentive site owner. If the reward is too valuable, the incentive marketer must generate significantly more respondents, just to cover costs. This is often where the problems begin. Some incentive marketers will require their respondents to opt-in to a huge number of offers in order to earn their reward. This can lead to consumers opting in for offers when they really have no interest in the product or service. They are simply doing whatever it takes to get that big screen TV, vacation, or gift card. Once this starts happening, lead quality falls and advertisers start seeing their conversion rates drop.
Taking all this into consideration, marketing through incentive sites can be a risky proposition for advertisers. If the program is set up and run correctly, it may produce quality leads at a reasonable cost-per-lead. If not, the advertiser may end up paying far more for a lead than the lead is actually worth.
As an advertiser, you need to carefully consider the networks and incentive programs you work with to generate leads. You are more likely to drive quality traffic if you do your homework, select the right companies to deal with, and then closely monitor their performance.