Re: online targeting

From: Tim Lee <TLee_at_webcmo.com>
Date: Thu, 28 Jan 1999 13:50:16 -0600 (CST)

LEO SCHEINER WROTE:
>Tim and I have crossed swords before because he knows so
>much and has such sophisticated methods using complex maths
>to reach his conclusions
>
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Leo, I am quite honored when so many people recognize my
math capability. Honestly speaking, I only have very limited
stats knowledge and I have never been interested in
statistics. I use stats only when I HAVE TO use it to solve
marketing issues.

I would like to use real numbers to illustrate some other
online targeting issue. (As a matter of fact, some numbers
you have seen here were my son's (5th grade) homework. I am
training him to be an online advertising expert. :-)) The
data is from Iconocast. (Dec. 16, 1998 issue) The data
demonstrates a comparison between targeted and untargeted
banner advertising results:

--------------------
Targeted vs. Untargeted Banner Campaign ROI Analysis

                Impressions CPM CTR* CPV** CPS#
Targeted 40,000 $25 0.25% $9.80 $143
Untargeted 200,000 $5 0.46% $1.18 $500

* Clickthrough rate ** Cost per visitor # Cost per sale
Source: Dec. 1998 GrowthSpurts.Com
----------------------------

The results show that targeted banners have higher price,
lower click through rate, higher cost per visit but lower
cost per sale.

>From the above data, we see that the company spent equally
$1,000 on targeted and untargeted banners. The targeted
banner brought in about 100 visitors while the untargeted
banners brought in more than 900 visitors. Among those 100
people who have clicked on targeted banners, 7 bought the
products on the web site while only 2 out of more than 900
from untargeted banners bought something on the web site.

What we have learnt from the above numbers? First off,
online advertising is costly. If you don't have a good
promotion plan, you are most likely to lose money; Secondly,
online targeting is very expensive. Without a well designed
targeting system, you are unlikely to compensate what you
pay for the targeting.

More interestingly, this set of comparisons provided several
unexpected results that need more detailed research before
we make any conclusion. To understand the targeting
mechanism, we need to understand: 1. Why targeted banners
generated lower click through rate? 2. why targeted visitors
have lower click through rate but higher conversion rate?

There are many other factors influencing the effectiveness
of banner advertising. Before we measure the effects from
other factors (not treat them equal), we are unable to
explain these two unexpected results.

Best,

Tim Lee
Editor -- Journal of Web Marketing Research
http://www.WebCMO.com
A site dedicated to web marketing research.
WebCMO CyberAnalyzer -- profile and target your customers online.


========================================================================
------------------------------------------------------------------------
       This week's Online Advertising Discussion List sponsor:
                                ValueClick

 ValueClick has cost-effective ad space available for *Smarter Buyers*
-> Our Cost-per-Click model means risk-free Reach to over 10k websites!
ValueClick Ad Network | 805.965.0543 | http://www.valueclick.com

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



Received on Thu Jan 28 1999 - 15:02:53 CST