NONE: RE: ONLINE-ADS>> Does Targeting increase CPM?
RE: ONLINE-ADS>> Does Targeting increase CPM?
Allan Sabo (asabo_at_ad-network.com)
Mon, 10 Feb 1997 10:39:41 -0600 (CST)
>Does Targeting increase CPM?
Jim, in a word, Yes.
But why? Well, let me take a stab at that. First, we all agree that this
medium is like no other, in some ways it is like print, in others it is
like broadcast, and yet in other ways it is like direct response mail. I
heard a phrase once that said, "marketing on the internet is like sending
your message to millions of people around the world, one person at a time".
So, with respect to target marketing on the internet, it is my opinion that
this medium closely resembles that of direct response mail. The last time
I purchased a mailing list the more targeted I made the list, the higher
the price per name would go. Hence, I would suggest the same pricing model
for interactive advertising.
Yet, I realize that competition may drive many networks to consider
targeting as a value added. While they may win a few clients, I do believe
that strategy will lose the war. What we will need to determine as an
industry is "what targeting capabilities are "inherent and obvious", these
should become value added features, those targeting capabilities that are
derived out of your "abilities", these should increase your CPM rate.
As far as how much the price increases... that is tough. Through my
limited experience with mailing list companies, prices start at about 5
cents per name, and the cost to add a criteria is in one cent increments,
or about one fifth the base price. (your experiences my vary).
More importantly, WE as an industry, need to look at the potential of
response. In direct mail, I think the industry average response rates are
about .05 of 1% (but lets say it is 1%). And according to statistical
research conducted by I/PRO on ad-banner response (click-thru) rates are at
about 2.85%. Hence, Jim, we can evaluate pricing and targeting based on an
equivalent return to achieve a similar value to a response.
I cannot tell you how to price your the incremental targeting of your
service, but I do hope that you will carefully research our sister industry
and decide on fair comparable pricing relative to the value you deliver.
As for our industry, if we do not show extreme prejudice in establishing
our pricing models we may end up giving away the entire store. Further,
poor and shallow pricing will render it impossible for any of the "smaller"
sites to generate enough revenue to continue to exsist. In my opinion, we
have an awsome responsibility since so much is riding on the ad-revenue
model to justify the internet as a viable medium of the future. so please,
price with prejudice.
Allan Sabo
Website Advertising & Marketing Consultant
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asabo_at_ad-network.com 216-961-8670
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