Re: Ad Blocking Software

From: Brad Jensen <brad_at_elstore.com>
Date: Tue 21 Mar 2000 14:16:27 -0600

HAL PAWLUK WROTE:
> The Net is a great communications vehicle. And you can
> work marketing communications into the flow. But
> banners at their current price levels aren't a great
> way to do it.
>
> This has been masked because the online ad sellers have
> managed to couch the argument in terms of comparing the
> cost of banner click-throughs against the cost of new
> customers created by direct mail, for instance, and
> that's not valid.
>
> A direct mail response rate of 2% means that 2% of the
> recipients accepted the offer. A banner click-through
> rate of 0.5% means that the clickers finally get to
> _see_ the business offer. Think about it - it's a big
> difference.
>
> A direct mail effort with a $ 2,500/CPM and a 2%
> response rate creates customers at a cost of $50 each.
> The 0.5% banners with a $25/CPM will see perhaps 1% of
> the clickers converted to customers at the site, so the
> customer creation cost is $500.

Not entirely true. If the direct mail response is a
purchase at 2%, then the customer is made at $50
marketing cost. But what is the fullfillment cost? What
is the loyalty of the customer? How much will future
marketing and sales to this customer cost?

The attraction of the web, when it is done well, is
that the sales cost (not just the marketing cost) is so
low, loyalty can be very high, and the backend
profitability of the customer relationship can be huge.

I don't remember why I went to amazon.com in the first
place - it might even have been a news story rather
than a link. I've spent thousands of dollars there in
less than a year. Good searching, great selection,
great reviews, suggestive selling, and PAINLESS
ORDERING.

If the guy who runs that place runs for President, I'm
voting for him.

There are also the issues of the amount of time and
corporate attention it takes to do a direct mail
campaign, the inability to tune the elements during
rollout without major expense and gnashing of teeth.

And if the banner pulls 2% with a conversion rate of
4%, the cost for new customer relationship creation
just went to $31.25. That assumes that your list is
targeted (at $25 CPM it should be) and your offer is a
clear, convincing, entry-level purchase.

If you made that customer relationship happen thru the
web, further marketing cost to that same customer is
near-zero. Fulffilment cost is a fraction of telephone
ordering, and I would expect the average order to be
higher. The results is a more profitable customer
relationship, with higher customer satisfaction.

The problem I see with web marketing efforts is that
they still treat it like it is an electronic magazine
or something.

For example, if I were amazon.com, I'd wait a few
weeks, then email the customer:

How did you like 'The Greatest Generation?' Who else
should we tell about this book?

Personal note goes here: 'I loved this book, and I
saved $7.45 purchasing it thru Amazon.com'

Then give them a discount for other who purchase books
off that link, and tell them their discount credit each
time it changes, by email.

Make it a preferred customer program, so there is no
problem with privacy. Tell them you won't give their
book buying history to anyone.

Or wait till they enter the site again, get their book
purchases from a cookie, and ask them if they want to
participate in the myreview process.

--
Brad Jensen brad_at_elstore.com
President
Electronic Storage Corporation Tulsa OK USA
918-664-7276
LaserVault Report Retrieval & Data Mining
www.Laservault.com




Received on Tue Mar 21 2000 - 14:16:27 CST