Cats Protection made use of a 'payment-by-results' option for a DRTV advertising campaign, which helped it boost responses to the advert by 65 per cent.
Cats Protection was the first charity to test a payment-by-results fundraising system for its DRTV ad campaign, which ran between April and June.
Charities usually pay for their TV advertising spots at a fixed cost per 1,000 viewers, regardless of how well the advertising performs. The new system allows charities to set a minimum number of donors that must be recruited, thereby guaranteeing a maximum cost per donor. Cats Protection chose to cap the cost per donor at £200.
If the advertising schedule isn't meeting the donor recruitment target, the new system gives the charity the flexibility to change it. The company behind the system, Payment by Results LLP, claims major television corporations, including ITV and Sky, are amenable to payment by results because they are under increasing pressure from online advertising.
How it worked
The ad took the perspective of an abandoned cat, which viewers see looking into its empty former home and falling down a hole on a building site before being found and taken to one of the charity's branches. Viewers were asked to give £3 a month by direct debit and to consider offering a home to an abandoned cat.
The advertising ran nationally on cable and satellite television. The payment-by-results system used Tracq software, which the company claims gave an accurate performance analysis. The software identified which slots were underperforming, then used this information to change the advertising schedule mid-run.
Cats Protection's main aim was to recruit donors at a constant price to be developed in the future, rather than financial outcome, and it increased responses to the advert by 65 per cent during the burst. The charity plans to continue using the system when it screens the adverts again later this year.
It also received calls from 1,561 people, 268 of whom became committed givers. One year's worth of donations from supporters recruited by the advert will be worth £18,591. Many callers also offered to rehome a cat.
"If the campaign had been run in the normal way, it would have cost us a lot more money," said Janet Wickens, head of fundraising and communications.
EXPERT VIEW - MIKE COLLING, MANAGING DIRECTOR, MIKE COLLING AND COMPANY
I believe charities should avoid payment-by-results arrangements because I think it is a recipe for paying more than is necessary, as indicated by Cats Protection's very high £200 cost per donor. In my opinion, a reasonable cost per donor would be less than half that figure.
You are disadvantaged with payment by results because you are sharing your media information with the media owners - in the case of Cats Protection, this was the television companies.
The trouble with a payment-by-results arrangement is that it enables the stations to find out the cost per response to your advert.
Normally, the skill of a media buyer is to blend the average cost per donor with the average cost of airtime. A usual agreement, for example, would be to sell airtime at a £50 cost per donor. Under payment by results, however, a station could see that there is now a cost per donor of £100, in which case they simply won't sell you any airtime. You end up with tiny volumes.
The main problem is that it tends to restrict the volume of media you have access to. What's more, on the media you do buy, the average cost per donor tends to be high - as was the case in this particular example.