The goal of any advertising campaign is to promote sales by getting the right messageto the right audience at the right time. Once you have identified yourtarget audience, you need to come up withspecific, measurable objectives to guide your campaign. The purpose of your campaign willprobably fall under one of these categories:

  • Planning the Branding Campaign

  • Planning the Traffic-Building Campaign
  • Planning the Direct-Sales Campaign

Plan Your Branding Campaign

The objective of a branding campaign is to impress your firm'sbrand identity upon potential customers - not to go for the immediate sale.Instead, the hope is that by putting a message about your company in front of enoughpeople for enough time that they will think about you when they do decide to buy. Thistype of online campaign is very much like a traditional print, radio, or TV campaign. Youbuy a number of impressions - of a banner ad on a Web page, a spoton a radio program, or a magazine display ad - and pay for them in units of athousand, hence the term cost per thousand, or CPM (the M is from the Latin mil, or thousand). For example, 30,000impressions of a banner ad on a Web site at a CPM of $20 would cost $600. Here aresome typical CPMs for online advertising.

Ad Placement CPM
Search engines $20-$50
Search engine keyword advertising $40-$70
City guides $20-$80
Top 100 Web sites $25-$100
Small targeted content sites $10-$80
Ad networks $10-$70
Sponsored content $45-$85
Auction sites $1-$25

If you are running a branding campaign, you can use these numbers to develop yourspecific, measurable objectives. Since no one has yet developed a simple, accurate way tomeasure the actual effectiveness of any branding campaign, about all you canmeasure is the CPM you actually pay. Fortunately, Web advertising space is widelydiscounted now, so you shouldn't have too much trouble negotiating reasonable rates.

Plan Your Traffic-Building Campaign

The objective of a traffic-building campaign is to getas many viewers as possible to click on your ad and visit your site. Theadvertisement is really just the teaser offer that brings the prospective customer in thedoor, like a barker at a carnival. Your Web site then has to engage the visitor if youhope to make him or her a loyal customer who visits again and again.

This traffic-building campaign is like the car dealer radio ad urging you to "comeon down" to the lot and check out their cars. Rather than getting in his or her car andactually visiting, though, a Web visitor simply has to click, hence the term click-throughrate (CTR), which refers to the percentage of people who click on a Web banner adand visit a site. Netwide, the click-through rate has fallen over the past year from anaverage of 2 percent to 1 percent (though well-targeted campaigns still get double-digitCTRs). Apparently, the novelty of ad clicking has worn off, so surfers now need a strongreason to click on an ad. This means that good "creative" is now essential for asuccessful traffic-building campaign. So, in addition to a message that interests thereader, you also need an animated ad full of words such as "free" and "clickhere" and other calls to action if you want to get people to click on your ad. Theclick-through rate on its own probably won't be a sufficient benchmark for your campaign.You can combine the raw CTR with the amount you paid for the ad to arrive at a more usefulmetric, the cost per visitor (CPV). For example, if you paid $600 for30,000 impressions and had a click-through rate of 4 percent, then your cost per visitorwould be $.50 ($600 divided by 1,200 [4 percent of 30,000] = $.50). Here are somecost-per-visitor guidelines.

Banner ad placement Average cost/visitor
Search engine (with keyword target) $1.40
Web site (trade) $2.00
Web site (consumer) $0.83
LinkExchange(consumer) $0.80
ValueClick (adnetwork) $0.20

If you are running a traffic-building campaign, you can use these numbers to developyour specific, measurable objectives. Since both CPMs and CTRs are so widely variable,you'll probably get the most useful measurements with the cost-per-visitor model.

Plan Your Direct-Sales Campaign

The objective of a direct-sales campaign is to getsite visitors to take action, usually by buying something. If a branding campaignis like TV ads on the Web, then this model is like direct marketing on the Web.

The typical direct marketing campaign begins with a potential customer receivingan offer in the mail. The first challenge for the direct marketer is to get the customer toopen the envelope; for you, it is getting the customer to click on your ad. So of course you wantyour direct-sales campaign to generate a good CTR. The big difference is in the offer atyour site. While a traffic-building campaign manager would be content to get customers to viewyour site's terrific content and bookmark it for subsequent visits, the success of adirect-sales campaign is measured in dollars. You not only have to attract good prospects,you have to motivate them to actually buy. You can adjust your analysis of the numbersthat you used to arrive at cost per visitor to determine your cost per sale (CPS).For example, if you paid $600 for a campaign that brought 1,200 visitors to your site and10 percent of them ultimately bought your product, then your cost per sale would be $5($600 divided by 120 [10 percent of 1,200] = $5). On its own, this raw cost-per-salenumber is not very useful. If you are selling a $10 CD, then a $5 CPS looks horrible; ifyou are selling a $20,000 car, then it looks pretty good. The industry range for CPSs isbetween $1 to $15 and ranges between 5 percent and 30 percent of the purchase price.

Bottom Line

Advertising has always been a tough buy. The common lament "I'm sure that I'm wastinghalf of my advertising spending - I just don't know what half" rings true formost media buyers. Online advertising offers new opportunities to make ad sellers moreaccountable, but as an ad buyer you still have to watch your spending carefully.

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