Thur 1st Jun '00
In this issue (Part 2):
1. VOTING BOOTH
==>Which is better, pay per click or cpm banner advertising?
2. TOOLS AT NOWSELL.COM
==>Useful tools to make your life easier from NowSell.com
3. FEATURE ARTICLE
==>Who Is the CyberCustomer?
By Rob Spiegel.
Subscription details can be found at the end.
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X VOTING BOOTH X
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This is the place where we take a quick poll for a snapshot of
the Biz Bits family's position on a given topic.
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This week:
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Did you have any sales or marketing experience before coming
online?
YES! >>>> mailto:yes-nowsell.com
I had some sales or marketing experience before coming online!
NO! >>>> mailto:no-nowsell.com
I had no sales or marketing experience before coming online!
ERR? >>>> mailto:err-nowsell.com
I'm not sure... depends...?
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Last week:
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Would you ever consider buying any kind of CPM banner
advertising? (CPM = cost per thousand impressions, i.e. you pay a
set price for every thousand displays of your banner)
YES! >>>> 57%
I would consider purchasing CPM banner advertising!
NO! >>>> 29%
I would not consider purchasing CPM banner advertising!
ERR? >>>> 14%
I'm not sure... depends...?
[Azam: Well that's a surprise. I expected many more NO votes.]
*** Have you voted on this week's question? Don't forget! ****
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Voter Feedback:
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YES!
Depending on how much I had to pay. If you've got a good strong
site, then it would be worth it, if only 100 of the 1000 visitors
purchased from you.
Jane Fulton
http://www.mylinksite.com/janesplace
[Azam: Unfortunately Jane, you've overlooked that not every
showing (i.e. each impression) of your banner will result in a
visit to your site. The reality is that very few who see your
banner will actually click on it.
According to Nielsen/NetRatings the average banner click-through
rate is currently around 0.4 percent. So from 1000 impressions,
you could be looking at 4 visitors!
Of course you wouldn't - nor can you - buy just 1000 impressions.
Lets say you bought 100,000. From that, say Nielsen/NetRatings,
you can expect an *average* of 400 direct, click-through visitors.
If we take an average CPM rate of around $20, your total cost
will have been $2000. Divided between your 400, that works out at
$5 per click-through.
A 10% visitor/sales conversion rate ("if only 100 of the 1000
visitors purchased") is extremely good: most web sites have
conversion rates less than a quarter of that. At a 10% conversion
ratio you would net 40 sales. Each sale has cost you $50. A 2.5%
conversion ratio would result in 10 sales, with each costing you
$200.
However, as I emphasized above, these calculations are based on
averages. CPM rates vary widely. For un-targeted, general
audience locations, and with small sites, you can negotiate a CPM
rate below $5.
Using the Nielsen/NetRatings figure, A CPM of $5 will bring your
customer acquisition cost down to $1.25 per click-through, or $50
per sale (at a 2.5% conversion ratio). Get your CPM down to $3
and you're looking at $0.75 per click-through and $30 per sale.
On the other hand, for highly targeted advertising on a top
property you could be looking at a CPM of $50+. Considerably
more in some sectors. Of course, the more targeted your banner
placement, the greater the number of click-throughs you will get.
Still, I wouldn't recommend it for the small business owner.
It's also important to remember the other element in the
equation: the banner itself. The Nielsen/NetRatings figure of 0.4
percent is an average: some banners perform far better than
others. I have heard of banners generating click-throughs as high
as 8-10%, though it should be noted that this is well above the
norm. If you get a 4% ratio, you are already doing *very* well.
For a rough, ball-park figure, most online marketers use the
formula of a 1% click-through, coupled with the average
conversion ratio of their web site (or a 1% ratio if this is
uncertain). Generally speaking, at a CPM of $5, you should be
ready to pay $50 per customer.
If you're thinking of using CPM banner advertising, I recommend
you don't use your own banner (even if you are a graphic artist).
Work with someone experienced in the field. Preferably someone
who can prove the click-through ratios their previous banner
campaigns have generated. Have a range of back-end products ready
to sell to make the most of your cost of acquisition.]
I would consider using banners, but only if they were quite,
quite cheap, as opposed to most of the programs I've looked into.
I have not yet met anyone who was a true fan of banner
advertising.
We do list our banners with one company, because they charge by
the click, not the per thousand ratio.
Paula aka Miz B
WHAT THE HECK IS HIP HOP COUNTRY? Listen FREE now and find out!
http://www.crazedcowboys.com Ridiculous yet oddly endearing
newsletter: mailto:subsig@crazedcowboys.com
[Azam: Yes Paula, CPC banners (Cost Per Click) are a better
choice for many small business owners, especially anyone new to
banner advertising and wanting to 'go it alone.' Prices typically
run from between $0.20 and $0.50 per click.
However, you should still do the math. If your banner has a high
click-through ratio, and you have a good CPM offer, that might be
the more cost-effective option.
CPC banners also offer something else: free branding. Good for
the buyer. Not good for the seller.
Intentionally or not, you can put out a duff banner displaying
your logo with 'YourSite.com' emblazoned across it, which
generates hardly any clicks but effectively 'gets your name out
there.' (Have you noticed how many banner ads clearly display a
dot com address these days?)
Though often disputed, IMHO banners do help in brand-building. It
may not be the most effective means of online branding, but
nevertheless, it helps breed familiarity. That leads to more
visits, which - if the site is good - leads to more customers.
Imagine the scenario: you receive an email containing links to a
couple of widget suppliers.You've seen banner ads for one of the
links on dozens of occasions. You didn't pay much attention at
the time because you weren't in the market for widgets then.
But now that you are, which link do you think you'd be most
likely to click on first? Yep ... the one you already know the
name of. Somehow, perhaps subconsciously, you feel that site is a
surer bet, or must be a bigger, better business.
Or what about the first time you want to order flowers online? If
you have recently seen quite a few 'FantasticFlowers.com'
banners, and, like many experienced surfers, you often type
domain names straight into the browser, you will likely type in
FantasticFlowers.com before troubling to make a search. And, if
FantasticFlowers.com know how to look after you, BestFlowers.com
won't get a look-in.
Obviously, whether CPM or CPC banners, these effects are the
same, excepting that in the CPM model, you pay for it.
Because of the low click-through ratio, most small business
owners don't rate banner advertising very highly. And although I
believe there is more to banner advertising than click-through
ratios, unfortunately, branding and association cannot be
measured empirically.
//---- Side Note ----\
Interestingly, for their Q1 2000 Online Advertising Report,
AdKnowledge managed to track the actions of those that view a
banner but don't click. What they discovered will shock you:
there are more conversions from users who only viewed an ad, but
did not click, than from users who clicked!
http://www.adknowledge.com/update/oar_1stqtr00.pdf
\---- End Note ----//
To my mind, many CPM rates are vastly over-priced. True, you
might gain something through being associated with a top-flight
web site. But to really benefit from a CPM campaign you need a
lot of exposure. A few hundred thousand impressions is not going
to put your name in the minds of many people. Therefore, unless
you have big bucks to spend, you will almost always be better
buying CPC ads. Of course, on the flip side, you will almost
always be better off *selling* CPM ad space than CPC!
Even cheaper CPC rates can be got by setting up your own
pay-per-click affiliate program at http://www.clickXchange.com/
or one of several similar services. Here you can decide yourself
how much you are willing to pay affiliates for each
click-through. Many online enterprises are paying as little as
$0.01 to $0.10 per click to drive traffic to their web sites.]
>>>>>>>>>>>
NO!
? None this week!
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X FEATURE ARTICLE X
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-------------------------
Who Is the CyberCustomer?
-------------------------
By Rob Spiegel
What does the Internet consumer really want? What makes a
shopper come to your site to click the buy button? Novelty?
Convenience? A holiday shopping deadline? Cheap prices? Maybe
a chance to win in a drawing or a sense of loyalty to an
enthusiast site? Perhaps your customer is a Gen Y consumer who
is accustomed to buying online. Maybe your customers is a
retiree buying toys for his grandchildren (25 percent of all toys
are purchased by consumers over 60).
Now that U.S. online consumers are reaching saturation, there are
enough Internet consumers for sites to focus on very targeted
sections of the online population. Niche sites can reach their
customers based on the unique content and product mix of a
specialty market. Mass market sites have to target their
customers by demographic group.
But wait. The Internet is not about demographic groups. The
Internet is the anti-Proctor and Gamble. The Internet is about
highly precise targeting to consumers who know pretty much
exactly what they want before the log on. Or do they? Is there
window-shopping on the Internet? Is there a place for impulse
purchasing? Does the Internet hold to the marketing lessons
learned by Coke and McDonald's?
Sometimes you have to throw the baby out with the bath water
because it becomes impossible to distinguish what's baby and
what's bath water. It very well may be that the only marketing
strategy the can be borrowed from the brick world and
successfully transported to the Internet is McDonald's famous,
"Would you like fries with your order?"
Oddly, few Web sites have utilized this technique, even though
they are uniquely qualified to make it effective. It can appear
in an email like this: "Last time you visited our site, you
bought a Bob Dylan CD. Are you aware he just released a new
album this week? It's getting great reviews (Click below for
review links). Because you recently purchased from us, you can
take a 10 percent discount on this new CD. Also, Bob Dylan is
touring to support the new CD. Click before to see the tour
itinerary. If you purchase a concert ticket through our link to
Ticketmaster, we can give you an additional 10 percent discount.
P.S., you agreed to receive emails like this when you purchased
your last CD."
The market for Internet consumers is improving, even if the Net
companies are often the last to figure out how to develop a
relationship with them. According to ActivMedia, the longer
shoppers have been online, the more they spend. Those who have
been online 5 years spend twice the amount of recent arrivals.
Among shoppers who expect to increase their online spending, on
average they expect to increase it by 43 percent. The report
also noted that the time between a consumer's first Net
connectivity and first online purchase has dropped significantly.
Four years ago it used to take 22 months. Now it happens in an
average of four quick months.
Given the high costs of obtaining an online retail customer, $60
on average, Internet retailers need to create a base of repeat
buyers in order to survive. Yet consumers are fickle online by
the very nature of the Internet, which allows quick travel from
site to site. All it takes is a slow-loading page and your
customers of off down the road, even if he was in mid-purchase.
To obtain retail success on the Internet, merchants need to build
a recognizable brand and create an effective loyalty program to
keep customers returning again and again.
Sounds easy, but the Internet is filled with trap doors and
twisted turns on its own conventional wisdom. For every report
that explains the tools of loyalty programs, there's a report
that shows the loyalty programs are woefully disappointing. For
every disappointed apparel site, there is a jubilant travel site.
For every encouraging statistic about rising Net purchasing,
there's a study that shows that Internet consumer spending
represents less than 5 percent of total retail spending. Yet
even with all the confusion and overblown hopes, there are
millions of hefty-income consumers poking around online, and they
are getting freer and freer with their credit card numbers.
Rob Spiegel is the author of The Shoestring Entrepreneur's Guide
to the Best Home-Based Businesses (St. Martin's Press) and The
Complete Guide to Home Business (AMACOM Books).
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OK, that's it for part two! Below you'll find the info section.
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