Pay-for-Performance Advertising Agreement
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A Pay-for-Performance Advertising Agreement is a advertising agreement that involves pay-per-impression charges (in which the purchaser pays only when there are measurable results).
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- Counter-Example(s):
- See: Pay-per-Action, Electronic Media, Internet, Affiliate Adverising, Advertising Contract.
References
2020
- (Wikipedia, 2020) ⇒ https://en.wikipedia.org/wiki/Performance-based_advertising Retrieved:2020-10-27.
- Performance-based advertising, also known as pay for performance advertising, is a form of advertising in which the purchaser pays only when there are measurable results. Performance-based advertising is becoming more common with the spread of electronic media, notably the Internet, where it is possible to measure user actions resulting from advertisement. Performance Marketing is different from Brand Marketing which focuses on awareness, consideration and opinions among target consumers.
2018
- American Medical Association. (2018). "Evaluating Pay-for-Performance Contracts."
- QUOTE: ... Under a pay-for-performance approach, the payer compensates physicians according to an evaluation of physician performance on defined metrics, typically as a potential bonus on top of the physician’s fee-for-service compensation The bonus is not paid per transaction but, rather, at a defined time period (e g , quarterly or annually) The payer bases its evaluation on its data for that physician Most commonly the evaluation is based on administrative or claims data and certain defined quality measures, or on a cost of care summary Patient satisfaction data is also used to measure access as well as communication effectiveness Physicians who meet the payer’s targets may receive a pay-for-performance bonus payment
2012
- (Dellarocas, 2012) ⇒ Chrysanthos Dellarocas. (2012). “Double Marginalization in Performance-based Advertising: Implications and Solutions.” Management Science 58, no. 6
- ABSTRACT: An important current trend in advertising is the replacement of traditional pay-per-exposure (pay-per-impression) pricing models with performance-based mechanisms in which advertisers pay only for measurable actions by consumers. Such pay-per-action (PPA) mechanisms are becoming the predominant method of selling advertising on the Internet. Well-known examples include pay-per-click, pay-per-call, and pay-per-sale. This work highlights an important, and hitherto unrecognized, side effect of PPA advertising. I find that, if the prices of advertised goods are endogenously determined by advertisers to maximize profits net of advertising expenses, PPA mechanisms induce firms to distort the prices of their goods (usually upward) relative to prices that would maximize profits in settings where advertising is sold under pay-per-exposure methods. Upward price distortions reduce both consumer surplus and the joint publisher-advertiser profit, leading to a net reduction in social welfare. They persist in current auction-based PPA mechanisms, such as the ones used by Google, Yahoo!, and Microsoft. In the latter settings they also reduce publisher revenues relative to pay-per-exposure methods. I show that these phenomena constitute a form of double marginalization and discuss a number of enhancements to today's PPA mechanisms that restore equilibrium pricing of advertised goods to efficient levels, improving both consumer surplus as well as the publisher's expected profits.