Online Advertising Seminar: Q&A for Tues. November 16

From: Wiley Online Seminar Series <seminars_at_tenagra.com>
Date: Thu 18 Nov 1999 04:48:41 -0600

ADVERTISING ON THE
INTERNET, 2ND EDITION
Online Advertising Seminar
with Robbin Zeff
and Brad Aronson


TUESDAY, 11/16/99,
"PRICING ONLINE ADVERTISING":
-----------------------------
[Janet Attard, from the Business Know-How Forum, AOL:]
What kind of rates can small targeted sites expect? And
does it vary by the market they target? Do sites
targeted at women command more than those targeted at
men and women in the same general market?
*****
BRAD SAYS: Small targeted sites can expect to receive
a $20-35 CPM, and it does vary by the market they
target. If a site is targeted towards all women, it
might get a $20 CPM. If the site is targeted towards
women heads of households, it could get a $35 CPM.
Sites targeted at women can command more than those
targeted at both men and women, but it depends on the
advertiser. If women make the buying decision for the
product/service, then the women targeted site would
clearly be more valuable.

If your site has low traffic, charging a CPM (cost per
thousand times an ad is seen) may not be effective (you
won't make any money). In that case, the site needs a
sponsorship package for a higher price. The sponsorship
package would include multiple ad placements within
certain areas of the site and perhaps a few pages of
promo info to which ads link.



[Anonymous, from the Online Advertising Discussion
List:] Most of what I see about pricing is aimed at
high volume sites and is expressed in CPI. Are there
other pricing approaches that would make more sense for
a low- to moderate-volume site that's drawing
well-defined visitors?
*****
ROBBIN SAYS: CPI may be the most popular pricing
model, but it's by no means the only option out there.
Some small- to mid-size sites have done extremely well
with a flat-fee pricing model. This is where you charge
a set amount per month with a guaranteed number of
impressions delivered. The flat fee is set for one,
three, six or twelve month periods. This works well for
the small site because it helps in budgeting and, more
importantly, cash flow.

To learn more about the various pricing models
available check out Chapter 7, "Pricing Online Ads," in
"Advertising on the Internet, 2nd Edition."

BRAD SAYS: CPM, cost per thousand times the ad is
served, and a flat sponsorship rate make more sense. I
am assuming that by CPI you mean "cost per inquiry."
CPI, is not the primary ad pricing mechanism for most
of the high traffic sites. They usually use CPM.



[Anonymous, from the Online Advertising Discussion
List:] I gather that some sites sell ads for a
specified time period (e.g., per month or quarter),
without regard to the number of visitors. This seems
simpler than CPI pricing, and thus is more appealing to
a small site with limited resources. Is this reasonable
to do? How would one set prices?
*****
BRAD SAYS: This would be a fixed rate for a
sponsorship. It is the best way for a small- to
medium-sized site to generate ad revenue, because CPI
usually generates very low rates, and CPM only works
when a site has a lot of traffic. For a sponsorship
package, you need to offer an advertiser much more than
a banner. Perhaps they get two mentions in your email
newsletter, a co-branded mini web site that talks about
their products, two ad placements that are integrated
into the content of the page, etc. I would suggest
seeing what other sites targeting your audience charge.
These are with whom you need to be competitive. In
general, charging what would be the equivalent of a
$50-$80 CPM can be acceptable for the right
sponsorship.



[Anonymous, from the Online Advertising Discussion
List:] Are agencies even interested in selling ads for
a low- to moderate- volume site?
*****
ROBBIN SAYS: Finding good sales help is tough, and
nowhere is it more difficult than for the low- to
moderate-volume site. There are several options for
getting sales help. One is to use a Web site
representation firm that sells ad space on behalf of
the site publisher, but these firms are few and far
between. The few major rep firms still out there tend
to gravitate toward the major brand sites.

The industry evolution has favored ad networks over rep
firms. There are clear differences between a rep firm
and an ad network -- a rep firm represents a defined
slate of clients and pitches each one separately as a
unique buy. An ad network, on the other hand, sells its
network of sites as category or other targeted buying
opportunities. Most of the major ad networks only
accept sites with at least 500,000 impressions per
month.

There are many different types of ad networks which
will be happy to add a small site to their list of
members. One option is to join MSNLinkExchange, which
has something like 400,000 member sites. Or try the
more targeted route and find an ad network that only
services sites in your particular category.

BRAD SAYS: Typically agencies don't sell ads. Agencies
buy ads for their clients. Networks sell ads for
different web sites. I would check with Flycast
(www.flycast.com), and Burst Media
(www.burstmedia.com); both of these networks will
include low- to moderate-volume sites in their
offerings to advertisers. You should also check out
24/7 (www.247media.com).



[Anonymous, from the Online Advertising Discussion
List:] Are advertisers generally willing to consider
pricing plans other than CPI?
*****
ROBBIN SAYS: Advertisers are often willing to try
another pricing plan that might give them a better
deal. In fact, it is often the advertisers, via media
buyers, who want to haggle over pricing with the
publishers wanting a defined and fixed price.

This industry is still evolving and nothing is set in
stone. Today's new pricing plan could be tomorrow's
industry standard operating procedure. So go out there
and be a trail-blazer.



[Tom McCulloch, from the Online Advertising Discussion
List:] We'll be setting up a medical specialty content
site that we feel will be targeted to a very specific
audience. I've done some projections on the number of
unique visits, and page views which we hope to realize.
Of course, we can paraphrase Will Rogers and say "I
never met a projection I didn't like," but optimism
notwithstanding, I'm stuck at trying to determine
(i.e., guess) how much of our potential inventory I
would be able to sell.

Your post of today (Tuesday, November 16) was quite
clear that targeted sites, which we hopefully will be,
can command a much higher CPM than their counterparts
dealing with a more general audience. That, is a cause
for optimism on the CPM side, but the question still
remains as to how much of the available inventory can
sold at relatively decent rates.

I can appreciate that this is at best a general
question and that every site will have a different
answer, but I was hoping to get a general feel as to
what to expect.
*****
ROBBIN SAYS: Tom, you asked how much of your inventory
you can hope to sell at a reasonable rate. This reminds
me of a conversation I recently had where a site was
debating whether it was better to sell out its
inventory at a low rate, or only sell a portion of the
ad inventory at a new higher rate.

One person argued that it was better to be sold out at
a low rate, because a proverbial "bird in the hand is
worth two in the bush." This way, he could forecast and
plan his budget. He also didn't want to risk not
bringing in this amount by alienating his current
advertisers with too great a rate increase.

Another person thought this practice was leaving too
much money on the table. He felt it was better to only
sell half of the inventory at twice the price, leaving
open the opportunity to sell the other half of
inventory. If it sold, the total would be much higher.
And if it didn't sell, the site was no worse off.

There is no "silver bullet" answer to your question.
Great salespersons can do amazing things like selling
swampland in Florida, but few are lucky to have a
salesperson with the magic touch, so you should go for
quality. If you have a quality site with a strong and
committed audience, your site should be attractive to
advertisers trying to reach this audience.

BRAD SAYS: As a medical site, you may be in a better
position than most. If your target audience is
physicians, you will probably have an easy time selling
a lot of your inventory, as currently there aren't a
lot of great places to reach physicians on the net. If
your target audience is consumers who have a specific
condition, you should be able to sell 60-100 percent of
your ad inventory.



[AngeliaLyn, from the Business Know-How Forum, AOL:]
Advertisers benefit from pay-per-click advertising, but
does it ever pay for web sites to accept cost-per-click
ads?
*****
ROBBIN SAYS: The only time it pays for an advertiser
to accept cost-per-click ads is if: 1) you're a small
site willing to take any ad revenue you can get; 2) you
have so much ad inventory you might as well sell it as
pay-per- click (PPC) rather that over-deliver huge
amounts; or 3) the request is coming from one of your
best customers, and you're willing to do a PPC campaign
because of all the money they already spend on your
site.

BRAD SAYS: The problem with accepting cost-per-click
(CPC) advertising is that you need to trust that the
advertisement will work. If you know your site well
enough, you should be able to pick out the
cost-per-click deals that will generate revenue for
your site. CPC is also good when you haven't sold your
inventory, because you can get some revenue for the ad
space.



[Peter Ferland, from the Online Advertising Discussion
List:] I'm responsible for increasing advertising sales
for an ISP. I'm doing a lot of cold calling and
prospecting to major companies and organizations, and
I'm doing a lot of follow-up -- I think my prospecting
ideas are great, but I haven't had a lot of sales
responses. The most frequent objections are "we don't
have the budget," "our budget for this year has been
spent already," etc... I know that a lot of money is
spent on banner ads. How can I close these prospects?
*****
BRAD SAYS: You need to reach the person in charge of
making purchasing decisions. If you're a national ISP
with significant traffic, I would make sure you are
listed in the places advertisers look for ad rates --
http://www.adknowledge.com/website/index.html
(AdKnowledge, AdPlanner) and
http://www.srds.com/get_listed/index.html (SRDS) are
two good places.

Also, it is worthwhile to advertise to media buyers.
ClickZ (www.clickz.com), ICONOCAST (www.iconocast.com),
I- Advertising Discussion List
(www.interentadvertising.org), and the Online-Ads
Discussion List (www.o-a.com) are good places to
advertise.

You should try to focus on getting into year 2000
budgets instead of end of the year spending, which (for
the most part) is already allocated.



[Angela, from the Business Know-How Forum, AOL:] I am
new to marketing and have just started at an agency.
One of our clients is a new e-commerce business, which
is something no one here has any experience marketing.
I was told to come up with a marketing plan for them,
but everything I read on the subject contradicts
itself. So my question is what works? They want to sell
to businesses and to consumers, but mostly business.
They sell a certain office supply and want people who
make purchasing decisions to come to them. I'm thinking
of doing a direct mail piece for the commercial market,
but what else is there besides direct mail? Also what
is the best way to reach consumers that is not too
costly? Right now it's a matter of getting their name
out there. What's the most effective way to do this?
*****
BRAD SAYS: If there are web sites where the target
audience surfs, you may want to consider advertising
there. In general, you need to have some sort of a
promotional offer to get consumers to respond to
e-commerce ads on the net -- perhaps you can offer free
shipping or a discount. Also, e-commerce ads work best
when they are next to product reviews or editorial
about the products being sold.



[WEBargains, from the Business Know-How Forum, AOL:] Of
the many methods available to increase sales, which
ones are the most/least effective? Banners? Newsgroups?
Purchasing keywords?
*****
BRAD SAYS: Banners - Of the options, banners are the
least effective, but they do work. Newsgroups -
Newsgroup postings, when done properly (giving advice
rather than a sales pitch), can be very effective for
driving sales at an inexpensive cost per sale, but
newsgroups don't generally drive a high volume of
sales. Keywords - Very targeted keyword purchases are
extremely effective for generating sales. Text Links -
I hope you don't mind, but I've added text links to
this list. Text links, next to product reviews, are the
most effective way to increase sales.



================================================
This seminar will continue throughout the week.
Wednesday's topic was Pricing Online Advertising. The
answers to those questions will be posted tomorrow.
Tomorrow's topic is Ad Management & Measurement.
Please, submit questions on this topic to
seminars_at_tenagra.com today. Friday's topic follows.
================================================



BUYING AND SELLING SITE USER DATA

If there is one thing that "Advertising on the
Internet, Second Edition" makes clear, it's that you
can get much higher prices for advertising delivered to
targeted users than untargeted users. New technology
makes it possible to collect an enormous amount of
personal data about site users, often without their
awareness that they've given it up or that it's being
stored. This situation creates great opportunities for
intelligent advertising and/or abuse, depending on how
you see the issue. "Advertising on the Internet, Second
Edition" has an excellent new chapter dealing with
Internet law and privacy issues written by Rochelle
Blaustein. Unfortunately, we don't have permission to
reprint it here. As a prelude to our discussion, we
provide you with the authors' thoughts about collecting
data on users.

"Site Registration"

The simplest and often most accurate way to find out
about a user is to ask the user directly. The key here
is that users need to provide that information. The
publisher may be able to get users to provide personal
information by offering the opportunity to customize
the web site, enter a contest, receive a discount, or
some other means. Basically, the publisher needs to
give the user a very good reason to provide demographic
data. If the web surfer provides that data, the ad
server can work in conjunction with the database that
stores customer profiles and targets ads accordingly.

For example, is a pet site asked users to register for
a drawing for a year's supply of pet food and the
consumers list their type of pet, the dog food makers
would know they weren't wasting advertising inventory;
they could target only those people who said they had
dogs as pets. (Often, if a publisher can get the user
to provide a zip code for customized news, weather and
other information, other demographic data can be pulled
based on the zip code.)

One of the main misconceptions in the use of ad serving
software is that publishers believe the software will
make this type of targeting a reality. The software
will enable this type of targeting, but the publisher
needs to collect the data from the consumer to make it
work.

In trying to gather consumer data, it's important to
keep in mind how the consumer feels. A 1998 Jupiter/NFO
Interactive survey of consumers found that only 16
percent of respondents reported that they were "very
likely" to register at a site that requires
registration. The study went on to ask what factors
would encourage them to fill in a registration form.
Over half of the consumers (56 percent) said that their
willingness to register would increase greatly with a
guarantee that their personal information would not be
misused. Other reported important factors included
content of higher value (41 percent) and a less
time-consuming registration process (32 percent).
Incentive programs ranked lower in this survey, with
only 23 percent saying affinity points would serve as
an enticement, and 21 percent that sweepstakes would.

Privacy is a big concern when it comes to
personalization issues. When BOL (the online
book-selling venture of Bertelsmann AG) decided to
employ Net Perception's personalization technology for
its European customer base, it had to address the
heightened privacy concerns of European customers. The
site developed a unique privacy policy element to allow
customers to update their personalized profiles as well
as their BOL purchasing history, making the customer
master of his profile information.

*****
ABOUT THE BOOK:

"Advertising on the Internet -- Second Edition"
by Robbin Zeff and Brad Aronson
(John Wiley & Sons, ISBN 0-471-34404-4, 435 pages, $24.99)
Companion Web Site: http://www.wiley.com/compbooks/zeff

New Edition of a Bestseller Covers the
Latest Technologies and Hottest Trends

"Advertising on the Internet --Second Edition" describes
today's most successful online advertising and marketing
initiatives. It provides an inside track on everything from
online advertising models and direct marketing to Internet
advertising management tools and market research online.

As the newest medium on the block, Web advertising presents
challenges. Yet it has four distinct advantages that are
leading it toward center stage: Targetability, Tracking,
Deliverability/Flexibility, and Interactivity. No other
medium guides the consumer from information seeker to
purchaser like the Internet.

These features are becoming more and more difficult for
major advertising agencies on Madison Avenue to resist.
Some of the world's largest advertisers, such as General
Motors, Eastman Kodak, and Disney have recently made
visible and vocal commitments to online advertising.

The new edition of Advertising on the Internet covers both
local and international markets. It has a new chapter on
legal issues contributed by well-known Internet attorney
Rochelle Blaustein, and a new chapter entitled "How to
Advertise for Free or Almost Free" by Web site awareness
expert, Eric Ward.
__________________________________________________

Copyright John Wiley & Sons, Inc. To order a copy of
"Advertising on the Internet," call 1-800-CALL-WILEY or
visit the Wiley web site at http://www.wiley.com. This book
is available through any independent bookseller found on
bookweb.org and all online bookstores, including
amazon.com, barnesandnoble.com and borders.com.




Received on Thu Nov 18 1999 - 04:48:41 CST