NONE: Sell ad space and lose less!(Was: a few questions...)
Sell ad space and lose less!(Was: a few questions...)
Russian On-Line Literary Society (teneta_at_komkon.org)
Mon, 22 Jul 1996 08:47:17 -0400 (EDT)
On Sat, 20 Jul 1996 Jeantheau_at_aol.com wrote:
> Are you saying that
> commision-based "ad placement" agencies won't likely be interested in working
> with small sites? At what point, say in terms of monthly gross ad revenue,
> will they start to get interested?
No, some advertisers seem to be very interested in working with small
sites. I just say that the E-Zines will have to sell their ad space
about hundred times cheaper than what one can see on the rate cards. So,
here is a slogan: sell ad space and start to lose less on your website!
Art. Lebedev, a journalist and web designer, recently joked,
that "to change URL *is* mission impossible". We add links easily but
never have time to modify or remove them. This difficulty suggests
certain advertising potential. Some companies already started to
use it.
As it was demonstrated here, Web advertisement at $20/1000 views is
not affordable for those who sell inexpensive products. What is affordable?
Two weeks ago I was approached by a privately-owned company. Let's
call this company 'Deal Int.' They wanted to buy ad space in my E-Zine.
Deal Int. proposed to exchange links. They promised to pay 20%
commission on each sale if a customer visits Deal Int. website
following links from my E-Zine. A representative noted that he is not
paid on per-membership commission basis, and his letter is neither scam
nor pyramid scheme. Later he admitted that this was 'mass mailing'.
Few days ago, reading I-Sales digest, I found that Amazon Books
'has come up with an interesting marketing technique'. This technique
is very similar to that of Deal Int.: to pay for the advertisement on
the commission basis. Amazon Books is an on-line bookseller, who
advertises with several major web sites, such as Yahoo, Lycos, etc.
As far as I know they don't do mass mailing.
Here is the relevant URL, where one can find numbers:
http://www.amazon.com/exec/obidos/subst/assoc-referral-fees.html/
Amazon Books provides a statement of the activity to help a
website to see which books were sold through the website's links.
Deal Int. also writes that it can tell from which site the
customers have come.
It seems like the advertisers try to buy ad space for $0.75-$3 per
1000 views or 1.5-4.5 cents per click. This is about 20 to 100 times
less than E-Zines officially charge. This is also twice or more times less
than what the banner ads wholesalers offer.
Why did the advertisers decide to be mentioned on the websites
and pay on commission?
Let's look at the results of the 4-th survey, conducted during
October and November 1995 by the Hermes project in collaboration with
GVU/GTRC. (As Alan Richmond recently caught me on misinterpreting
published results on hits/visits ratios, I warn that
my interpretation is not necessarily correct.)
The plot "How They Find out About Web Sites" shows:
Access Method Used by % of people
Web page links: 95%
Magazines: 65%
Friends: 53%
Newsgroups: 47%
Other sources: 32%
.sig's in the e-mail: 29%
Newspapers: 32%
(http://www-personal.umich.edu/~sgupta/hermes/survey4/preference.html#howfind)
It was repeatedly reported that the web page links are the most
common ways for people to discover new sites.
From this Hermes/CVU/GTRC report I also infer that:
13% people purchase books on-line once per 6 months;
9% people purchase in travel category on-line once per 6 months;
2% of the participants of Hermes/GVU/GTRC survey purchase books
on-line each month. 1.5% make on-line purchases in travel category.
Once per month is about how often a small E-Zine changes it's contents.
With 5% click rate, expected for the link with a description, and
2% sale probability, a book sale occurs once per 1000 views of the ad.
If a book costs $25 then with 3% commission a website earns $0.75 per
1000 views.
With $10 commission from a Deal Int. sale, 2% click rate, and 1.5%
purchase probability in travel category a website earns $3 per 1000
views.
The official prices that popular search engines and E-Zines charge
for the ad space are about 20 times higher than that.
However, the more important question is: does a customer make a
purchase first time when he or she visits a site? Unlikely.
Normally, we add a site to our bookmarks' list and then revisit it.
The webside builds awareness about the product. But being
paid on commissions from the sales it might never earn anything at all.
Nevertheless, to purchase advertisement on commission is probably
the only affordable way for a company that offers a cheap product.
Now, in order to be paid at sometimes a website owner needs to know
how many clicks does he or she actually sell.
Can I check, how many clicks was necessary for a purchase?
I can install a simple redirection script (called redirect.cgi and written
in Perl):
#!/usr/local/bin/perl
print "Location: ", $ARGV[0], "\n\n";
I also have to modify a piece of the HTML code
<A HREF="http://www.deal.com/"> Deal Int. </A>
as follows:
<A HREF="redirect.cgi?http://www.deal.com/"> Deal Int. </A>.
If the log shows 100 calls of 'redirect.cgi' but I still earn
no commission then this is the advertiser's fault and not mine.
However, the advertisers are not going to provide me with that
much knowledge. They either do not answer the question, whether a
redirection method can be used, or *redirect* me to their senior staff
members with this question.
How many ad spaces should Deal Int. buy, in order to make one sale a
day? As many as necessary to show an ad about 1000-2500 times daily.
Using small E-Zines requires about 25 sites. This is certainly not a big
problem for the mass-mailing approach. Each website is required to sign up
for a year. If during a day an agent recruits just one E-Zine, which will
sell one package per month, then a company with 100 agents can sell 300,000
packages next year, totally making $1,5 millions in sales (a package costs
$50).
That is why I think that this advertising method will
spread out quickly in a near future: it seems to be rather
inexpensive. I also think that many successful Web services, such as
banner ad wholesalers, will be hired as third parties to promote such
contracts.
Sincerely yours,
Leonid Delitsin
P.S.
Hermes is a research project on the commercial uses of the WWW
conducted by Sunil Gupta, a Marketing Professor at the Michigan
Business School, University of Michigan in collaboration with Jim
Pitkow and Mimi Recker at GVU Center and GTRC (Georgia Tech Research
Corporation), for whom this was 3-rd survey. Since then they conducted
a 5-th on smaller scale (April 10, 1996 through May 10, 1996, 11,700
unique responses, 1/2 of the 4-th survey volume).
I obtained a clearance from prof. Gupta, who permitted me to cite
his data. Professor's Gupta Hermes project, 4-th survey:
http://www-personal.umich.edu/~sgupta/hermes/survey4/
Georgia Tech Research Corporation (GTRC):
http://www.cc.gatech.edu/gvu/user_surveys/survey-04-1996/
To use Georgia Tech Research Corporation data, please,
comply with their Copyright form
http://www.cc.gatech.edu/gvu/user_surveys/survey-04-1995/copyright.html
P.P.S
See http://www.webtrack.com/sponsors/ for the information on the rate
cards.
P.P.S.
No warranties, folks! Absolutely ;)
