Norman Cook, aka Fatboy Slim, has a new band – The Brighton Port Authority (The BPA) – and is using cost-per-engagement (CPE) advertising to promote the band’s forthcoming single “He’s Frank”, which features punk legend Iggy Pop.

The BPA’s record label, Southern Fried, will advertise “He’s Frank” with a performance-based banner ad campaign that it says defers the risk to its advertising agency, Silence.

Silence is Golden

The agency believes that CPE, which sees advertisers pay only for results, reflects the importance of performance-based models to advertisers in the current economic climate.

The founder of Silence, Lee Henshaw, says that the most common way for advertisers to approach banner advertising is to buy inventory upfront from a publisher by the thousand page views – the cost-per-thousand (CPM) model. Henshaw believes his agency “brings accountability and targeting” of search engine marketing (SEM) to display advertising online by only paying publishers when people rollover ads they are serving.

"Silence is hooked on a prophecy: that online advertisers will only pay agencies and publishers for display advertising campaigns that work," Henshaw said.  "That's their experience with search engine marketing, so why should banner advertising be any different?"

Kieron Matthews from the Internet Advertising Bureau (IAB) believes this shift to performance based online display advertising will need to be embraced quickly by online publishers.

"Advertisers recognise that measurability is online's strength, and that's encouraging them to ask for performance related inventory from publishers," Matthews said.  "This is a challenging time for everybody, publishers included, and it's likely they'll react to this approach by embracing it rather than risk being left out."

Happy Hour?

Does CPE present a risk to publishers, potentially lowering their income at a time when advertising budgets are already falling? Or don’t they have a choice in the current climate?

Grant Keller is managing director of Acceleration Europe, which helps publishers with inventory categorisation and rich media services. He says offering rich media and alternative pricing models can give publishers a differentiated advantage in a competitive market.

“It is not a risky model provided the publisher has addressed the challenge of correctly categorising and pricing assets for maximum yield, for example which assets are sold on a CPM basis, and which on cost-per-click (CPC), cost-per-acquisition (CPA), CPE basis,” he told NMK.

Bird of Pay

Colin-Petrie Norris, Managing Director International of ad network Specific Media, said that advertisers nowadays have a multitude of campaign objectives, from simply placing banners in front of as many people as possible, through to click-through-rate, cost-per-engagement, cost-per-acquisition and, in some cases, cost-per-lifetime customer value.

“With current economic conditions being what they are advertisers are tending to insist on more measurable outcomes for their campaigns,” he concluded. “Accountability counts. Providers or publishers that can embrace this will tend to do better in tougher times.”