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Zephrin Lasker is the co-founder and CEO of Pontiflex. He has been involved with online marketing since its inception more than a decade ago. Zephrin is also a serial entrepreneur, having successfully launched two start-ups prior to Pontiflex.

In the course of his career, Zephrin has played a key role in shaping campaign successes for a variety of clients such as Sprint, Cendant, Earthlink, and eFax, helping them acquire over 8 million new customers.
Prior to co-founding Pontiflex, Zephrin founded The North Road Group, an interactive agency. He has also worked as Vice President of Business Development at i33 Communications, where he managed sales and technical teams to help deliver new customers, launch state-of-the-art websites and deploy cutting edge marketing initiatives.

Prior to i33, Zephrin worked at Commerce One Global Services managing Sprint's new web initiatives. He has also co-founded the e-commerce company Beautility, where he served as Chief Operating Officer.

Zephrin has a background in corporate finance. He has worked for Dresdner Kleinwort Benson in the areas of corporate finance and mergers and acquisitions. Zephrin began his career as an Equity Analyst at Creditanstalt in Prague. He is an avid fly fisherman and is currently learning how to spey cast. He has a BA degree from Reed College.

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Raiders Of The Lost ROI

Written on
May 28, 2008 
Author
Zephrin Lasker  |
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Raiders Of The Lost ROI

ADOTAS EXCLUSIVE — If Indiana Jones was an online marketer in our times, he would undoubtedly have been asked to embark on a quest for the medium that delivered the greatest return on investment. 

The mission wouldn’t be an easy one. It would take him through the crumbling ruins of failed campaigns littered with the victims of ever falling click-through rates and increasingly expensive search keywords. Indy would find that when it comes to delivering returns, online advertising has largely failed to live up to its promise.

Take the poster child of online advertising– the banner ad. Over the last few years, click-through rates on banners have dropped from 0.50% to plumb the depths of the 0.05% – 0.10% range. Even if one factors in the so called “view-through” conversions, it is clear that this method is ridiculously cost inefficient.

It’s no wonder that so many advertisers find traditional banner-landing page campaigns to be wasteful. 

Even publishers have suffered at the hands of the non-performing banner. A Pub-matic study published last month found that the prices paid for online ads bought through ad networks dropped 23 percent from March to April 2008.

These falling returns for both publishers and advertisers can help explain why a recent IBM research study found that two-thirds of senior marketers expect 20 percent of ad revenue to move away from impression-based sales, in favor of action-based models within three years.

It also helps explain why 2007 saw a paradigm shift for the industry, with spending on performance based pricing models exceed that on display (IAB PWC 2007 Internet Spending Report).

“So what’s the problem?”  Indy would have asked. “Surely advertisers can leverage these performance based models to increase their ROI?”

That’s what we all thought. By enabling advertisers to pay only for clicks and not impressions, search engine marketing would allow marketers to generate increased returns and make this economic downturn different from the last, banner-filled one.

Sadly, this has not happened. Sure, search engine marketing has been a definite step-up from online banner advertising in terms of increasing ROI, but the returns have not been nearly enough.

To put it simply, due to increased competition, search keywords have become very expensive. A 2007 Doubleclick Performics Search trends Report shows that there were nearly six times as many keywords with a cost per click (CPC) of more than $1 in January of 2007 than the prior year. The cost per keyword increased by 33% and the cost per click rose by as much as 55%.

And to really rub it in, a substantial portion of the clicks were the direct result of fraud. According to Click Forensics, the overall click fraud rate for the pay-per-click (PPC) industry was up 15% over 2006 levels.

With online banner advertising less responsive than the DMV on a bad day, and search engine marketing producing increasingly diminishing returns, what is the online marketer to do?

We should do what Indy would have done. Cut to the chase.

Marketers need quality leads to build responsive e-newsletter lists, member loyalty programs, direct-marketing efforts or for their sales force. This is why so many banner and search campaigns are deployed for the purpose of lead generation.

When marketers generate leads through banner and search campaigns, they spend hours poring through spreadsheets to calculate their Cost-per-Lead metric.
Why then can’t they pay on a Cost-per Lead pricing model to begin with?
Clicks and impressions would become irrelevant. Marketers would pay only for interested consumers. They could devote their time to engage these interested consumers and drive business. Seems simple enough.

What then is standing between now and this return-filled utopia?

Till now, the finger could be pointed at a lack of transparency in the online lead generation market, a failing that prevented advertisers from generating brand-specific leads efficiently.

It’s important to make a distinction here. I’m not talking about sales leads. The market for sales leads – leads that are generated on the basis of demographic criteria and sold to multiple advertisers-is fairly mature.

I’m talking about marketing leads – brand specific leads- generated for a particular offer. Think of a company like Coca Cola or an airline like Southwest looking to sign people for their newsletter or member loyalty program. They would want leads that have signed up specifically for their offer. They would want to be able to optimize campaigns by mapping leads to their sources.

Until recently, due to a lack of transparency, they couldn’t even have insight into where their offers were running. Hence they found it impossible to generate marketing leads on a CPL pricing model.

But in a manner that would make Adam Smith proud, the market has responded to the advertiser demand for increased returns. Transparency is now a reality in the online lead generation market.

As a result, instead of having to run inefficient banner or search campaigns, advertisers can deploy cost-effective marketing lead campaigns on CPL pricing models.

New times call for new measures. I don’t know if Indiana Jones said that. But if he were an online marketer in 2008, he surely would have.





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