Re: Trends for 2003

From: Janet Attard <attard_at_businessknowhow.com>
Date: Mon 13 Jan 2003 12:45:56 -0600

> Folks, branding works, but the current obsession on CTR's, CPC and CPA
> campaigns is making it impossible for small/medium independent sites to
> survive.

I agree with you that branding works. I think it works in two ways on
targetted sites.
First, is the traditional branding effect. People will see a name and may
click through the first time they see it, or the 5th, or the 20th, and may
not click through.. but if they are regular visitors to a site, and they've
seen an ad on the site repeatedly, the name starts to sink in as something
familiar and trustworthy.

The other way I've found it works is by association. What I mean is the same
thing that makes ads in trade magazines work - people come to a site partly
to find sources for products and services. Or, they return because they
remember seeing an ad on a site and forgot to bookmark where it linked to. I
just got a question like that again yesterday. There have been a couple of
printing ads on our site during the fall, and someone sent me mail yesterday
asking for the name of the printing company they had seen on the site in the
fall.

But the problem for small publishers and small advertisers both, is the cost
to produce and promote a quality site versus the rates one can get for ads.
For instance, suppose you have a site that gets a million page views a
month. (A million "real" page views, not spider hits, etc.) Say, the site is
fairly targetted for a desirable demographic. And maybe you find an
advertiser willing to pay $15 CPM based on page views, not unique users, and
not limiting the time a day an ad is seen. The site would get $15,000 a
month from that advertiser. And if this small site was lucky, maybe they
could sell another $10,000 in advertising per month. Now assuming there was
no sales rep to split commissions with and not ad network (where you
probably wouldn't see those rates anyway), then the site would collect
$25,000 a month. Well, assuming it could sell that much regularly, and got
paid regularly.

Now, consider what it costs to run a site that gets that much targetted
traffic on a regular basis. What does the server cost, server management if
the site isn't run by someone who's a network guru, bandwidth, other
services, programming, software and upgrades, content, production and
maintenance of the site, search engine placements/ppc and other advertising,
customer support, newsletter distribution service, etc., etc., there's just
not much left.

A lot of small advertisers would have problems justifying those fees on the
basis of their own cashflow. They would need to know enough about their
market, the clickthrough and conversion rate of the ad they are running, and
the amount of profit they typically can make from each new customer to
decide whether the advertising would pay off.

For instance if they got a 2% clickthrough rate on the million page views,
(20,000 click throughs), and there was a 3% conversion rate they'd get 600
new customers. They'd need to make $25 profit (not sales, but profit) from
each customer just to break even. If the ad was untested and didn't have a
good sales message, the conversion rate could be .5 percent or lower,
though, and the amount of profit per customer would need to be
proportionately higher.

Big advertisers and companies that have cash and have pretty good knowledge
of what the long-time customer profits are, could afford the ads, but
usually won't be bothered with the small publisher sites because they ARE
small. The conversion rate may be there, but not the volume of business
they are looking for.

So...... where does that leave most small publishers? IMHO, mostly creating
or looking for products of their own to sell -- or out looking for jobs.

--Janet Attard (attard_at_businessknowhow.com)
Business Know-How(r) - small business, career and self-employment resources
http://www.businessknowhow.com/store/salesleads.htm






Received on Mon Jan 13 2003 - 12:45:56 CST