Re: Cost-per-Action Advertising

From: Michael Odza <modza_at_sfnewmexican.com>
Date: Wed 25 Apr 2001 09:54:21 -0500

While I salute anyone who can make a deal that works, I
think there's an unfair comparison being made when we
make the analogy between web advertising and other
direct response, and try to buy our web advertising on
a cost per action basis. As one who sustained a highly
targeted print newsletter for a dozen years primarily
on direct mail campaigns, I'm intimately familiar with
the costs involved in DM. It's true that web ad
effectiveness can be *measured* by looking at the cost
per action, but I don't think it's a reasonable way to
*price* the purchase of the advertising space (trust
me--it's not just because I now have banner ad space
to sell!)

Look at this way: if you had something to sell, do you
think you could go to a direct mail shop and say, you
buy the postage, you buy the paper, you buy use of the
list, the mailmerge, etc., etc.--and I'll pay you a
little bit per order I receive? The medium costs too
much, the players know how much depends on the product
and the offer, and they would have gone out of business
long ago if they took a commission from the direct
merchants.

The big difference (okay, one big difference) between
the cases of direct mail and direct response on the
web is the cost of the delivery. As an advertiser, you
can't help thinking about how cheap those electrons and
pixels are to manufacture and push around, but it's
unfair to base your media decisions on your supplier's
cost alone. Even the response rates are not as different
as the price differential--half a percent is getting to
be pretty typical in DM these days; as the volume of
snail mail has more than quintupled in ten years, the
response rate has fallen in inverse proportion. What DM
people do is target, target, target; test, test, test,
and share each other's best lists--even direct
competitors.

Michael Odza
Web Publisher
www.santafenewmexican.com



Received on Wed Apr 25 2001 - 09:54:21 CDT