 | |||||||
 | |||||||
| |||||||
CHAPTER 13 Internet marketing methods
PR
Using traditional PR to promote your website is a very good way to build brand awareness and achieve sales for negligible costs.
Banner ads
I am personally not a very big fan of banner adverts. They are one of the most expensive forms of advertising on the internet. However if your company is trying to build brand awareness and recognition of your brand online it can become an essential tool.
We are at present in a period when banner advertising seems to be on the wane. You know those rectangular, flashing boxes at the top of web pages on commercial sites. Click-through rates have dipped to 0.39% average and the industry magazines regularly carry articles discussing the death of banner ads. But while banner ads aren't as effective as they once were, the truth is that a great many companies, large and small, still use banner ads as part of their advertising mix and will continue to do so. Nevertheless, advertisers are becoming more sophisticated about when and how to use banner ads.
CPM Banner Economics
While brand marketers may assess effectiveness in some fuzzy way, direct marketers look at any advertising method in terms of how many sales it produces immediately. Let me give you an idea of how the numbers might look for banner ads. Your results will vary, depending upon where you advertise and the effectiveness of your creative. Here are some arbitrary numbers to use in our calculation:
CPM
= 10 pounds (a typical rate for general, not-very-targeted websites)
CTR =
0.5%
Conversion Rate = 2%
Cost per Visitor = CPM / 1000 * CTR = 10 GBP/
1000 * .005 = 2 GBP
In our example, the 10 pounds you spent to show the banner ad to 1000 people netted you 0.5% or 5 visitors to your site. Each visitor cost you 2 pounds to get there. Hmmm. Not inexpensive. But now let's calculate what your advertising cost is per sale.
Cost per Sale = Cost per Visitor / Conversion Rate = 2.00 GBP/ .02 = £100
Oops! You mean it costs me 100 pounds to get one sale? Yes. Of course, if you have a 10% conversion rate rather than a 2% conversion rate, it only costs you 20 pounds to get a sale.
Lower Cost Approaches
What this all means is that banner advertising on a CPM basis can be expensive. If you have a compelling banner that 5% to 10% of the viewers click on, that can change the economics. If the price you pay for banner ads drops to 3 pounds CPM that can help, too. If you can pay a modest cost per click through, that would make a huge difference in the cost per sale. If you can pay a commission of 5% to 15% only when a sale is made, affiliate programs begin to look more and more attractive. But no matter which approach you use to pay for advertising, developing and placing 468 x 60 pixel banner ads is likely to be part of your advertising mix.