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The decline in print directories due to the growth of online options led a company to lose many of its local advertisers. To counter this, it decided to launch an innovative performance-based product to retain and win back local advertisers against traditional and online search competitors. However, this task faced quite a few challenges including misappropriated ad expenditures, underserved online customer segment, increasing preference of customers for the pay-per-call or pay-per-click models, and pricing systems such as pay-per-performance, which was complex due to the cannibalization risk involved and inaccurate call volume estimates. To achieve its goals, the company employed Deloitte, a leading business management and consulting services provider, for evaluating the strategic value of pay-for-performance in its existing and future product portfolio and to develop a go-to-market strategy. Deloitte assisted the company in conducting a detailed customer profitability analysis, by segment, to identify the most attractive segments and in understanding the preferred product features and estimated demand for the pay-for-performance product. It also helped in prioritizing the most competitive markets for the pay-for-performance market trial along with developing a pricing methodology that balanced a supply-side view of the pay-for-performance risk profile and a demand-side view of the value of a call to an advertiser. Thereafter, it helped the company launch its pay-per-call product in major markets. By understanding advertisers' needs and preferences, the company was able to transition its traditional business model into a more advanced, competitive business model, while minimizing cannibalization.
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