Webmasters, marketers, arbitrageurs and other experts directly related to contextual advertising, relatively recently “got acquainted” with a new feature in Yandex.Direct – “pay for conversions”. According to representatives of the YAN (Yandex Advertising Network), after the completion of the testing phase, almost 90% of companies were completely satisfied with the implemented functionality. What is the essence of the new advertising payment model, what are the pros and cons of it – read on.
How Pay Per Conversion works in Yandex.Direct and what it means
First, let’s deal with the very concept of “pay per conversion”. In contextual advertising, it means that YAN will withdraw money from the user’s account only if the visitor has completed a certain targeted action:
- purchase;
- newsletter subscription;
- filling out a form with personal data;
- entering a phone number;
- adding a product to the cart;
- etc.
The price of each conversion can be set by the advertiser, but if he cannot determine the optimal amount, the system will calculate it automatically. If there is no data to automatically calculate the optimal amount, it will be determined as statistics are collected and may change (either up or down). The main thing is that Yandex.Metrica is installed on the site itself, since the statistics are taken from here. Just like the goals themselves (conversions).
If we consider the payment for the conversion from the side of the average businessman, then for him everything is extremely clear and convenient, because he pays only for an accomplished client who has brought him income. And this is especially true for niches where there are many transitions, but few purchases. In other words, pay per conversion is a good option for those who want concrete results in terms of achieving value, and not just clicks on ads.
The principle of the strategy is as follows:
- The webmaster specifies the cost of the conversion and specifies the goal that will be considered by the system as a conversion (let’s say this is filling out a contact form).
- Money will be withdrawn from the webmaster’s account when the user who clicked on the advertising link filled out the form with his data (that is, when the goal was achieved).
An important point: payment can be charged for a conversion that was recorded within 3 weeks from the moment the user clicked on the link in the ad. The second important point is that only one goal can be assigned to one advertising campaign.
Advantages and disadvantages of the pay-per-conversion model
Innovation has both strengths and weaknesses. And although almost 30% of all advertising accounts have switched to a new payment model (Yandex data), experts using contextual advertising are divided in their opinions about the innovation. Let’s deal with this issue in more detail.
Benefits of pay per conversion:
- can be configured in just a couple of clicks;
- if the user finds it difficult to choose the optimal conversion price, it will be assigned by the system;
- money will be withdrawn only for specific actions performed by the user;
- if you make a mistake somewhere when setting up a campaign, financial losses will be minimal;
- pay per conversion works on the basis of an automatic algorithm that takes into account a lot of factors and is able to self-learn, depending on the goals;
- since it is the achievement of the goal that brings the business money, the new payment model is considered as transparent and understandable as possible.
Despite all these advantages, the model has a significant disadvantage and it lies in the last advantage (no matter how paradoxical it may be) – maximum automation.
Disadvantages of an automated pay-per-conversion scheme:
- in order for the system to start working correctly, you need to wait some time (in practice – 2-3 weeks) until the algorithm collects enough data from statistics;
- after launching ads into the rotation, the user will no longer be able to change its settings, because then the algorithm will have to collect statistics again and adapt to the new working conditions;
- if compared with the pay-per-click scheme, then the pay-per-conversion model gives a smaller audience coverage – with equal advertising costs, there will be less targeted traffic;
- there is usually a longer interval between conversions than between clicks, so it will be possible to identify and correct errors only a couple of weeks after the launch of the campaign;
- Since a pay-per-click company has many more settings and additional options, the pay-per-click scheme will not be as profitable compared to it (after all, the cost per click is lower than the cost per conversion anyway).
What is the conclusion?
Payment for conversions withdraws funds only for targeted actions performed by the user. Therefore, the scheme is by and large suitable for those companies that advertise their products with the aim of selling them quickly. If the user also needs impressions to reach a wide audience, then it is worth focusing on pay-per-click campaigns.
The new payment model is as automated as possible and has a minimum of settings. And the mistakes made in the process of these settings are not capable of leading to serious budget expenditures. Therefore, this approach is suitable for beginners trying their hand at contextual advertising (and experienced advertisers who are just testing their current campaigns).
An established client and the achieved goal of an advertising campaign are interconnected. And, very strongly. Therefore, the pay-per-conversion model helps to optimize the prices of each successful client. And this is just a great solution for complex niches (especially in the B2B segment) that sell some expensive products like excavators, innovative storage systems, etc.
Pay per conversion is an option for those who do not want to take risks. But experienced webmasters, marketers and arbitrage specialists will unanimously say that if there is no risk, then you can not expect serious profits. Therefore, pay-per-clicks as the main campaign model will prove to be much more effective than the new scheme. But, while this is a preliminary conclusion, because no one can say how everything will change in the future.