Re: Buy $40,000, Sell $60,000

From: Brian Shepherd <bshepherd_at_lycos.com>
Date: Wed, 9 Jun 1999 14:25:27 -0500 (CDT)

ROB FISHER WROTE:
<Scenario: Agency a) buys key word category on major portals
<b) creates generic ad for category, c) points portal ads to
<one page site devoted to sub-category ads, d) sells space
<or this site.
<Example: Agency a) buys the word "golf" for $40,000, b) ad
<reads "Visit Golf Resource Center", c) Golf Resource Center
<page is divided into quadrants, d) space sells to four
<advertisers: equipment company, resort, LPGA, and apparel
<company for $15,000 each.
<Questions:
<Is there terminology in the trade to describe this type of
<arrangement?
<Would the portals allow it? I see nothing in any portal
<contracts preventing it, except their right to refuse
<advertisers.
<Seems that everyone wins in this scenario. Why isn?t it
<happening?

Rob,

On the surface, neat idea and seemed to make sense, until I
thought about it more. While I can't speak for my company
on whether we would accept this (sorry, not my call), I'm
NOT so sure it's a great business model for your
advertisers. Keywords are still being sold on a CPM basis.
To make my rebuttal easy, let's take your $40,000 at $40 CPM
(I'll use $40 as an example) which would result in you
purchasing 1 million impressions. Assuming you get a 1%
click through, you will have generated 10,000 impressions to
your "Golf Center". At $15,000 for 10,000 impressions,
you're talking about a $1,500 CPM. And don't forget that
you're asking FOUR advertisers to share those 10,000
impressions to generate your goal of $60,000. There are
other logistical issues why I would advise against you
getting into this type of business, but my above argument
pretty much says it all.

If I was an advertiser, I'd bypass your business plan and go
straight to the portals myself, pay the $40,000 and not
share my "Golf Center" with anyone.
Regards,

Brian Shepherd
Ad Product Manager
Lycos Inc.
bshepherd_at_lycos.com

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Received on Wed Jun 09 1999 - 15:33:11 CDT