Media selection is all about return on investment (ROI)
One of the least sexy mega- . trends of the 21st century is the advertiser increasing emphasis on the bottom line of results, accountability and a better return on investment, according to the new book, “Media Planning & Buying in the 21st century” Ron Geskey
Let’s face it, a return on investment perspective, some digital media has been too little consideration to their cost-effectiveness compared to traditional media.
Say an advertiser objectives are 1) to generate maximum leads / sales in the budget, and 2) to simultaneously improve the image of the brand. The advertiser sets aside a budget of $ 100,000 for achieving these goals. The advertiser has decided to compare the projected cost effectiveness and the “branding” of the three potential direct response alternatives :. banner ads, direct mail and paid search budget before engaging
fundamental question of the advertiser was, “How many conversions can buy for 100,000 using 1) a combination of banners and ads for display, 2) paid search, or 3) traditional direct mail (in this case, a modest mailing piece in an envelope format $ letter). as regards the second goal of the advertiser’s brand, that approach will likely have the most positive effect on the brand value?
Metrics / assumptions
projections advertiser performance will depend on the parameters and assumptions used .. This comparison is based mainly on estimates of the Marketing Association Direct Following are the assumptions of the advertiser:
1 ads Banner / display are sold at an average CPM of about $ 6.00 a targeted audience .. According to a report from Marketing Sherpa, click throughs about.002 average, but are falling, and the latest report of the DMA (2010), the conversion rate between the clickers averages.044.
2. CPC averages $ 3.79 per click, depending on the DMA report, and averages 3.8% conversion rate.
3. Since the DMA cited results based on a modest piece of diffusion in a letter size envelope, direct mail would probably cost about $ .75 per unit ($ 750 CPM), including list, postage, and mailing room. DMA reported an average response rate of 3.4%
So here’s how the options compare, based on a budget of $ 100,000 :.
1 . Banners / Banner Ads s – Based on a $ 6.00 CPM and a.2% CTR, banner plan has generated 16.7 million impressions and clicks that about 33,000 have generated nearly 1,500 responses a cost per response of $ 68. The impact branding has been rated as “fair” because, assuming adequate creative, banner ads had the opportunity to communicate a brand message
2. Paid Search -. Based on the budget of $ 100,000 and an average cost per click of $ 3.89, the CPC campaign would generage over 26,000 clicks with 1000 conversions / responses to a cost per conversion of $ 100, or about 50% higher than for banners / ads. Branding The effect was rated as “poor” because it is negligible possibility of communication in ad copy. At $ 3.79, click the cost represents the performance of paid search costs. (For paid search to be as cost effective as direct mail CPC wouldhave about $ .75
3. Direct Mail . – In the world of traditional media, direct mail is considered extremely expensive. in this case, however, assuming a realistic CPM of $ 750 to send mail a letter envelope size / package to a highly targeted audience, direct mail is expected to reach just over 133,000 beneficiaries. a response rate of 3.4%, direct mail package would generate 4522 responses to a cost per response of $ 22, or about a third of banners / ads and cost a fifth of the cost of paid search by response. in terms of image effects the mail piece is also the greatest opportunity among these options (note :. does not include direct mail recipients who clicked on website).
based on the average parameters used in this example, direct mail was three times more profitable than banner ads and made nearly five times better than the CPC (who is injured with a cost of $ 3.79 per click). From the perspective of branding, internet creative pales in comparison to what can be done in direct mail (which also generates website traffic). As some of the shine disappears digital media, profitability and return on investment will become a bigger and bigger problem.
This example demonstrates once again that the decisions of media should not be made without due diligence and a built in bias for digital media. Planners need to predict outcomes based on the best measures and assumptions available.
( Read more : How to register a publisher account on adkode.com ? For online advertising agency )