Re: ONLINE-ADS>> Optimum Banner Ad Campaign Size?

Mike Scanlin (scanlin_at_photolabels.com)
Sun, 28 Jun 1998 07:24:55 -0700

• Messages sorted by: [ date ][ thread ][ subject ][ author ]
• Next message: Coyne, Dave: "Re: ONLINE-ADS>> Mass Medium? Targeting?"
• Archive Home Page
• Search
• Previous message: Ivan Weltman: "Re: ONLINE-ADS>> Mass Medium? Targeting?"
• Maybe in reply to: Rick Zwetsch: "ONLINE-ADS>> Optimum Banner Ad Campaign Size?"

History has shown that on 6/26/98 1:17 PM, Rick Zwetsch said:

>Does anyone have any information regarding the optimum size of a banner ad
>campaign (# of impressions) to achieve maximum effectiveness? Yes, I think
>the ideal answer is probably: "the more the better!", however, am wondering
>if there might be any research available?

First, pick a profitable metric. If your lifetime value of a customer is
$100 (sum of profits on all orders, current and future, for your average
customer) and you're willing to spend 20% of those profits to aquire a
new customer, then you should be willing to spend $20 to get each new
customer.

So now the question becomes: What is my cost to aquire a new customer via
banner advertising. As long as it remains below $20 you should keep
advertising.

For example, lets say you have a CTR of 5% on a banner that costs you $20
CPM to run. And lets say your visitor-to-customer conversion ratio is 4%.
Here's your cost per customer:

1000 impressions costs you $20.
Your CTR is 5%, so you get 50 visitors.
Your sales conversion ratio is 2%, so you get 1 customer.

Therefore, it has cost you exactly $20 to bring in this one customer.
Now, there may be other customers in that group of 50 who came by your
site. Maybe they'll return and become customers (especially if you were
smart enough to make them register for a free e-mail newsletter while
they were there).

But lets say that after a month your banner CTR drops to 3% (most banners
do drop over time). Your new cost to aquire a customer is:

1000 impressions at $20.
Your CTR is 3%, you get 30 visitors
Your SCR is 2%, you get 0.6 customers.

Your new cost to aquire is $20/0.6, or $33.33. Since our assumptions were
that you were only willing to spend $20 to aquire each new customer, you
should stop running the banner ads (or, more likely, change your banner
to one with a higher CTR).

Mike Scanlin Four Corners Effective Banners
scanlin_at_photolabels.com http://www.whitepalm.com/fourcorners

---
Increase your traffic: Subscribe to our Banner Tips e-mail list:
http://www.whitepalm.com/fourcorners/joinlist.shtml   It's Free!


========================================================================
------------------------------------------------------------------------
       This week's Online Advertising Discussion List sponsors:
		  Marketwave, 2CAN Media and ICONOCAST

 Which banner sent more QUALIFIED traffic? The one on Yahoo or Excite?
      Hit List can tell you.      Click here to find out how.
   http://www.marketwave.com/default.htm?AdName=OA3&AdSource=OA

				---

    Eisenberg Communications Group, WebRep and IMGIS Co-founder
           Ryan Steelberg Partner to Form 2CAN Media, Inc.
          Details:  http://www.2canmedia.com/mergernews.htm

				---

 "This continues to be the 'coolest' and most informative e-mail
  newsletter I get." Randy Haldeman, Director of Marketing, TEN-TV
            To subscribe, visit http://www.iconocast.com

------------------------------------------------------------------------
========================================================================
Online Advertising Discussion List      To Unsubscribe send UNSUBSCRIBE
http://www.o-a.com/                     to online-ads-request_at_o-a.com

• Next message: Coyne, Dave: "Re: ONLINE-ADS>> Mass Medium? Targeting?"
• Archive Home Page
• Search
• Previous message: Ivan Weltman: "Re: ONLINE-ADS>> Mass Medium? Targeting?"
• Maybe in reply to: Rick Zwetsch: "ONLINE-ADS>> Optimum Banner Ad Campaign Size?"

With an archive of more than 14,000 postings, since 1996 the Online Advertising Discussion List has been the Internet's leading forum focused on professional discussion of online advertising and online media buying and selling strategies, results, studies, tools, and media coverage. If you wish to join the discussion list, please use this link to sign up on the home page of the Online Advertising Discussion List.