Get Fundraising Costs in Line with Results
By Peter Feinstein
Times are tough for professional fundraisers. Development officers
at most colleges and universities are feeling the squeeze from rising costs and
declining budgets.
To make matters worse, the reality of nonprofit fundraising is dwarfed by
its poor image. Many alumni resist affiliation with their alma maters, hoping
to duck appeals for money. Those that are open to giving want their generosity
to benefit students directly, not pay for additional fundraising.
That usually isn’t the case with traditional direct-mail campaigns,
in which the initial appeal is a loss leader serving merely to identify willing
donors who can be approached again and again.
Zeroing In for Less
Finding those motivated donors – ones known to be interested in supporting
your institution – is the key to lowering the cost of fundraising.
Thus, it makes more sense to adopt a strategy that starts with a low, stable
cost to identify each motivated donor. Per-inquiry advertising (PI) – also
known as cost-per-lead, pay-per-lead or cost-per-action – is a form of
direct response marketing in which the advertiser receives free ad time and space
and pays only for results. In return, the advertiser gives up control of where
and when the ads will run.
Agencies that offer PI have relationships with media outlets – radio,
television, print, Internet, movie screens and billboards – and access
to their unsold inventory of ad time and space. The agency acquires the rights
to the unsold time and/or space and places clients’ ads as it becomes available.
The advertisers pay only for qualified responses. What constitutes a response
is negotiated between client and PI advertising agency. Packages can be structured
for a variety of results: per inquiry (any response), per lead (name and contact
information) – even per donation. The agency also can manage the plethora
of toll-free numbers and dedicated Web addresses that make responses trackable.
PI appeals to organizations that would benefit from receiving qualified leads
and want to establish stable costs per lead within their business plans. A PI
agency can give them rock-solid numbers they can count on for lead generation
in exchange for the flexibility in when and where the ads run. This approach
is particularly suited to large, public institutions with high percentages of
unaffiliated or loosely affiliated alumni within certain media markets.
Personal History
It was a nonprofit client that spurred my own interest in PI advertising.
I was helping the group run radio advertising campaigns in the Southwest, buying
local airtime in the traditional manner. The regional director was so pleased
with the results we produced that he referred me to their national marketing
manager, who offered me the chance to place national advertising but asked to
pay per lead. The media companies we worked with were willing partners, accepting
this client’s advertising on a pay-per-lead basis. The model has been so
successful that we’ve applied it, with similar results, to several other
nonprofit clients.
I’ve come to believe that colleges and universities really can benefit
from pay-per-lead advertising. If an institution is going to spend money to generate
donations, PI would be an ideal way for it to generate revenue with absolute
certainty that it would not overspend to get the results.
Peter Feinstein is president and chief operating officer of Phoenix-based
Higher Power Marketing. If you would like to offer feedback to this column, you
can e-mail him at peterf@hpowermarking.com.
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