Re: Web Advertising Networks

From: Rick Bruner <>
Date: Thu, 19 Aug 1999 16:45:55 -0500 (CDT)

>I hear a lot about the Internet being touted as the direct
>response mechanism of the 21st century. Everyone seems to
>claim ROI is the only effective measurement? True or False?

Well, a number of folks make the case that banners have the
ability to build brand awareness. I certainly respect the
research Millward Brown Interactive (
) has done on the subject. On the other hand, 20 years
later, we can all still sing the "plop-plop, fizz-fizz"
jingle for Alkaseltzer and remember the "I can't believe I
ate the whole thing" spot, but when's the last time you ever
sat around the dinner table laughing with friends about the
latest amusing banner ad you saw...or even remember a single
banner at at all, for that matter.

Bottom line is most people do view banners primarily as
direct marketing vehicles. Why else is "click-thrus" the
main measure of effectiveness? That said, I think most
people aren't doing the ROI math very effectively. The fact
that click-thrus is the main measure of success illustrates
the problem. How many online marketers are in the business
of selling a single impression of their homepage? That's all
a click-thru is.

In my experience talking to marketers, are tracking more
carefully through to the actual cost of customer
acquisition. According to coversations I've had with several
networks, including ValueClick, Be Free, AdKnowledge,
Flycast and others, who are in a position to see lots of
campaigns from lots of marketers, the typical conversion
rates for e-commerce merchants is 1% of those who have
clicked thru on the ad. That is, if you are getting a 1%
click-thru (double the industry average) and a 1% conversion
rate, you're selling to 1 in 10,000 who see your banner.

If you're buying the banner at a $10 CMP, that's a $100
customer acquisition cost. Imagine that you're getting the
industry average 0.5% click-thru rate, a 1% conversion to
sale and you're paying $20 CPM, that's a $400 customer
acquisition. For what's likely a $15-50 item you're selling.
You'd have to build one hell of a lifetime value equation to
convince me you're ever going to make money with marketing
costs like that.

That's compared to typical customer acquisition costs of
about $24-50 in the DM catalog world. So, is Internet
marketing the best thing that's ever happened to direct
marketing? Banner ads? Not hardly...

Rick Bruner

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Received on Thu Aug 19 1999 - 20:01:31 CDT


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