NONE: Re: ONLINE-ADS>> Order conversion
Re: ONLINE-ADS>> Order conversion
jgehman_at_creativelabs.com
Wed, 2 Sep 1998 18:21:29 -0500 (CDT)
Robert J. Woodhead <trebor_at_animeigo.com> wrote:
>You need to redo your numbers. Take it from someone who sells
>videos [ http://www.animeigo.com/ and http://www.videoz.com/ ],
>you'll go broke quickly. If your average order is $20, and your
>marketing costs are 0.08 x 200 = $16, that leaves only $4.00 for
>the cost of tapes, shipping, handling, and overheads.
>
>Spending $X to generate $X+1 of revennue only works when the
>product you're selling has near zero marginal cost (as,
>admittedly many net products do).
>
>That being said, I'm always looking for clickthroughs under a
>dime each; want to clue us in where you are getting them?
Nice catch Robert. I was wondering if anyone would notice
that?!?
Ahhhh, profit? I never said anything about profit--just that you
could break-even on gross revenue. Before we get to far down
that path though, the real point of the exercise was *HOW* to
conduct ROI analysis on various media campaigns--not *WHAT*
constitutes an acceptable ROI. Obviously, every business has a
different model. And apparently your ROI threshold is different
from Amazon.com's and others :)
=========================
As for the ever-elusive $.08 clicks, they're out there. Who,
where and how? We'd all like to know my secrets wouldn't we?
However, the answer is straight forward. You just need to work
on both parts of the CPC equation: 1) CTRs; and 2) CPMs.
First, reports of the death of the banner are greatly
exaggerated. We've seen some really innovative creative that
gets users to respond. Superior creative does require serious
effort. The name of the game is test, test, test. Second, in an
earlier post I said that $1 CPMs are coming this year for many
sites. (And got no rants, so let's try again.) Well folks,
they're here. Reports are circling from multiple sources that $1
CPMs are a major reality. Hmmm, perhaps CPM should stand for
cost per million? $500 CPMs anyone?
At $1 CPM, you only need a 1.25% CTR to get your $.08 click.
Today, delivering eye-balls is no longer the problem. As my
earlier post explored (and Robert so keenly observed), the
conversion rate is the sticking point. Supply is rarely the issue
(eyeballs); it's demand (profit).
Finally, something to ponder. Remember the old Ogilvy yarn that
the trouble with ad budgets is that half of the money is wasted,
we just don't know which half? Well, the trouble with Web ad
budgets is that *MORE* than half the money is wasted and it's all
too obvious which half. Cheers.
Joel Gehman
Internet Marketing Analyst
Creative Labs
mailto:jgehman_at_creativelabs.com
http://www.soundblaster.com
408-428-6600 x6904
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