The idea that advertisers should only pay for actual responses to their ads is gaining acceptance beyond the Web, where cost-per-action (CPA) ads are becoming more common. A SoCal company called REVShare has been doing the same thing on TV since 1989, with ads that urge viewers to call a 1-800 number or go to a Website. The company has relationships with 1,500 TV stations (most of these tend to be local, infomercial-style ads). These type of ads have become increasingly popular. The company says that it is profitable and that it has tripled revenues since 2003 (But it doesn’t give specifics—is that triple from $100,000 or $1 million?). Now, it is ready to expand further.
Today, the Carlyle Group and H.I.G Ventures co-led a $20 million venture round in REVShare. Even though the company’s been around for years, this is the first time it has tapped outside investors. They obviously believe that REVShare has a lot of room for growth in the local-ad market alone. But what is lacking in the whole CPA ad industry is a way to run CPA ads across the Web, TV, and other media. Also, nobody has really proven that CPA ads are effective for broader brand advertising rather than those Ronco slicers. Hopefully REVShare will use some of this $20 million to break new ground.
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