Forum Moderators: skibum
At the figures you quoted, each impression is costing you 1.3 cents.
I don’t know what the clickthrough rates on banner ads are, but say if you get 1 click per 100 impressions, that click has then cost you 100 x 1.3 cents = $1.30.
Then you’ve got to look at your conversion rate – how many people who actually make it to your site will buy? 1-2% is often considered a satisfactory result. Say you achieve 2%. That sale has cost you $1.30 (clickthrough rate) / 2% (conversion rate) = $65.00 per sale.
If you only have a 1% conversion rate that’s $130.00 per sale.
Is the item you’re selling still profitable if you have to pay $130.00 per sale right off the top?
Obviously the figures I’ve used are guesstimates, but you get the idea.
$13 per thousand or $13cpm is ballpark for what banners were selling for a while ago (its still sold as a "broadcast advertising" product.)$12,000 divided by 900,000 = 1.3 cents per impression, or $13CPM (per thousand)
It really depends on your CTR(click through rate) and the margin on your product or service, and how many visitors actually buy from you (Conversion Rate or CR).
Lets make a few assumptions:
The latest average click through on banners average that I have read is about .4% thats POINT 4 percent, not 4%. (This also depends on the creative of the banner, how highly targetted the terms are, and a few other small details.)
So, with 900,000 banners, we will assume you get .4% to actually click through and go to your site, or 3,600 visitors.
So far, thats $3.33 per visitor. ($12,000 divided by 3,600.)
Now if you can convert 2% of those visitors to sales, (again 2% is an oft quoted Conversion Rate) you will make 72 sales.
If you are going for direct sales, is 72 sales at your margin worth $12,000? OR, $166.67 EACH to make a sale?
I try to make at least 400% ROI on advertising, so for me, I would have to have a margin of just over $833 per unit to make this work for me.
This may be okay if you have deep pockets, and are looking for some branding value, back end sales, email capture for other pitches, or if your return on investment of $166.67 per sale is worth your time. I can't make that judgement for you, but unless my product or service netted me $800 or better, I'd pass.
Keep in mind these are ASSUMPTIONS just to illustrate the concept. Maybe the average CTR is now up to a whopping .425, or CR average for software is higher...
Overture has a ROI calculator for CPM / Banner buys..
I think it is Here [overture.com]
Thanks.
Like everyone else said, it still boils down to how you measure success. Do you want to make more direct margin than you spend in advertising? If branding and building awareness is important, then direct ROI might not be so important.
I can sign up normally through Yahoo for 1,000 impressions for $40.
Yes, I am trying to brand my site.
If their isn't inhouse capability to track them, GoToast has something about tracking banner campaigns on their site which is probably a lot less expensive than something like DoubleClick's [DART] tracking system. The site seems to assume everyone wants PPC management and it is not clear if you can do just banner tracking but might be worth checking into.
Take for example the case of Opodo. Now I had no idea who they were until I started seeing banners for it, then through their creative I worked out they were selling flights, and although I didn't click through the banner I now know who they are and will visit their site in the future when I want to make a booking.
Now if their media company come in and say, well Mr MD, we have the results, I am afraid we only have a 0.001% clickthrough you have lost all your money, that is complete rubbish. They have successfully branded their product. When people advertise on TV or the Radio do you think that they are building brand identity or working on a x amount of people will now buy this today, no, they work on the idea, well we are known now, next time Mr bloggs is shopping he will prob think of us while buying his weekly blue widgets.
I think on-line advertising has to sort itself out, CPA and CPC campaigns are simply not worth it for media owners, of course advertisers love it, most of the time they are getting valuable branding for free!
Phone up any TV station or magazine and ask them to put in a full colour ad next month but you are only going to pay them if someone fills in the coupon at the bottom and orders something. See what kind of answer you get, why should on-line be any different?
/end rant!
Phone up any TV station or magazine and ask them to put in a full colour ad next month but you are only going to pay them if someone fills in the coupon at the bottom and orders something.
Actually, those are called PIs (Pay for Inquiry) and they are quite common in the TV business. I can't speak for magazines.
Advertisers want accountability (read - results). It is true that not all the results of an ad campaign are immediate, but all the advertisers I work with expect to see bodies walking in the door when advertising dollars are going out.
Branding without sales = failed company.
I don't believe so - unless you are willing to contract for millions of impressions. If you are in the ballpark of 500k or less, you can add a zero to that 1. That's even if those networks will talk to you on the phone.
Ever notice how some networks never seem to sell "targeted" advertising? Those that do, are just run-of-a-category type sells and not germane to any specific sites you choose. That's because it isn't in their business model to do so. They may even have noncompete agreements with their upstream providers that they won't sell advertising on the side.
Ever notice how some brokers can have cash waved in front of their face and never sell an ad on a site per site basis? They just won't do it. They will waffle and ask for millions of impressions or price it at $30+ per cpm.
I feel the dirty little secret of the advertising industry is that they are nothing more than affiliates for larger upstream brokers. That boils down to about 2 actual banner ad houses on the net. The down stream "networks" handle the site management and tracking, while the upstream big brother does the ad serving and client sales and relations.
Take a network and trace out who is serving the banner. There's a high probabilty that the site ultimately serving that ad, is the site that sold the ad. Anybody inbetween that ad and the site it is listed on, is just a traffic management affiliate.
Those in networks - figure it out. I strongly feel there are some that have been mislead about the nature of advertising networks for years upon years.
Buying anything but "gimmick" ads from a major banner broker I feel, is a complete waste of money.
I'm not big on predictions, but I bet within the next two years, you turn on the TV and hear about an Enron like scandle in internet advertising.
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How "targetted" is that Yahoo banner advertising? If it is targetted at a commercial category where searchers are "looking for product" to begin with, I've seen click through rates that are very high.
Lastly, I'd think if you are going to spend that kind of money on advertising, I'd check into running your own quality affiliate program. $12k can go a very long way.
What do you think is the best way to brand a small company?
Direct accountability, such as is available fairly easily via the net is arguably the best thing that ever happened to advertisers, and the worst thing to happen to traditional media brokers. We once handled an account where the ad agency actually gave us the figures regarding all of their media for a large company.
We were astonished at the astronomical cost per action delivered by traditional media versus our very small PPC budget.
We got kudos for our successful campaigns, but the ad agency lost the account anyway. The aggregate increase of business versus cost (ROI) was dismal. I imagine they do not tout their CPA figures anymore.
Direct marketing agencies had the inside track using direct mail and its testing and accountability advantages over traditional "image" advertising. Add in (or multiply) the trackability of online media, and whoa, you bet your butt that ad agencies and banner brokers are shaking in their boots.
There will be LOTS of shakeouts in the conventional and banner advertising businesses. Look at 24/7 stock today.
Ad agencies in general do NOT like web advertising, and in our case, our agency/client did not even like outsourcing it. It was too accountable, and "made them look bad" by doing the right thing - inexpensively.
As advertisers start to actually find and EXPECT accountability, the whole game changes.
...natural selection, always at work... even in business.
I won't even fire up the banner script for $2CPM -I switch to house ads. After all, branding is branding, even if you do it yourself.
For many categories, I believe you could do a nice, moderately targeted campaign for around $3 CPM by shopping around among smaller publishers in the niche... which is exactly what media buyers do NOT do. I will readily admit that managing this would likely be cumbersome and time-consuming, so there should be an upcharge to cover the additional overhead.
With TV, radio, print - there's always a way to blow some sunshine into dark places [webmasterworld.com]
The guy was talking about an $18,000 buy from yahoo.
You could buy lots of banners and get a great rate from any adnetwork with that kind of spending. You could buy 50 million impressions at almost 40 cents cpm for that amount I would imagine. You could buy 18 million impressoin at 1 cpm for 18,000. With rates so low you have to be thinking about buying millions of banner impressions at a time or you needn't bother.
You could buy site specific on Burst for 5 to 10 cpm I imagine or far less.
Big advertisers go to big sites and spend big money for little result.
It stupid and thats why adnetworks are around.
If you have time you can go see the sites running RON ads that are related to your site and offer them 1 cpm many will take it unless you are after a really valuable demographic. If you are not picky you can start a CPM campaign on clickxchange or elsewhere.
I know the qulity of the ads that I will get from Yahoo will be legitimate. I was sticky-mailed by someone offering me 900,000 impressions for $900. When I asked him for references from customers and a contact at the sites it would be on, he delined. He stated that he did not give out the name of his clients and he just set this new banner program up two days ago. You get what you pay for.
Question: Our research says that a customer is 85% more likely to buy when they are offered something for free. Does anyone have any stastics on this.
Pharma especially, has a budget and the pressure is to spend it so it doesn't get cut the next quarter. As long as there is something to show for it, chances are the agency will get another chunk of cash to play with next quarter or year. Fancy reports seem to be worth lots of $$$ sometimes too.
From my experience, agencies could do a much better job of bid management, creating/selecting the right landing pages to increase conversions for PPC and banners. Often times the agency fees are too high to justify small buys that may be more targeted. Even if a client might get more results from them, it probably won't happen because it would take more setup and agency fees might make up a significantly larger percentage of the ad budget.
It doesn't really make sense, but that is just how it goes sometimes...for now anyway........
...natural selection, always at work... even in business.
Great line, bigjohnt. i might just say especially in business :)
I don't have any exact stats but once our website began offering 25,000 free impressions to advertisers to start a campaign we saw a large increase in interest.
This way advertisers can evaluate our service for themselves and not jump into a campaign blindly.
As far as an expensive Yahoo! campaign goes I would never buy impressions on Yahoo! if I was a small company. I think the value of Yahoo! is in branding since you get the association of being on the most popular site on the net. That being said, if I had a small budget I'd be more worried about getting actual eye balls to my site and I would look for smaller sites that offer campaigns for $1/cpm or around that rate and get a lot more exposure for my dollar.
Also I think I'd go with a PPC search engine before paying $13 CPM. 0.4% CTR at $13 CPM means you are paying a little under $4 per user that comes to your site. On Overture a $1 bid is going to get you a number one spot with almost all keywords. I realize a link on a search engine doesn't get the branding a banner does but at a quarter of the price (or less) I think it is worth it. Plus since you are only paying for visitors that actually come to your site, the ones that do come to your site get branded really well because you have their full attention...
All revenue sources considered, but excluding the sales revenue the sites generate for our real estate company (which is substantial, 60% of our leads are now coming from the web), I'm averaging no less than $2.50 CPM.
I'm probably goind to take your advice but still pay $100 for 2,500 banner impressions on Yahoo.
I have about a 5,000 keyword account with Overture, Sprinks, Kanoodle, Find-What, and Ah-Ha. Am I missing any? Espotting, etc.
