Do Business Well

Like a bunch of eager bunnies, Internet advertising has split, combined, and multiplied into a bewildering array of approaches to advertising on the Web. Using abbreviations such as CPM, CPC, CPA, CPT, and CPS make the novice Net advertiser’s eyes glaze over when he sees this alphabet soup of Net advertising jargon. If this is you, don’t feel bad. You’re not alone.

So, let’s go through, step by step, this seemingly incomprehensible zoo of letters. Let’s define them and see how using each of them can make the best use of your Internet advertising dollar. There’s a New World out there for advertisers on the Net. Accountability is the word and today’s Net delivers it in spades—not just audience estimates like in the real world. When you advertise on the Net, you know exactly how well your ad campaign is doing by the number of impressions, click-throughs, and responses (read sales) that you get from your advertising.

Impressions are correlated with awareness or brand advertising. You count impressions by how many times your ad is presented to a viewer. If the intent of your advertising campaign is to raise awareness of your product, service, or brand, then the number of impressions per dollar is of prime importance—that is, you want the most impressions you can get for the lowest ad dollar.

Click-through, in response to an ad by a consumer, simply indicates interest or intent. After he or she clicks your ad or goes to a URL that you’ve advertised in an email message or newsletter, click-through provides you with an opportunity to offer something for sale or even complete a sale. Other uses include filling out a survey or asking the viewer to take some other kind of action. Look at a click-through like a potential buyer opening a direct mail envelope to read the offer inside. The better the ad, the more potential it has to be acted on. If your intention is to have the viewer click your ad or go to your site, then the number of clicks—or visitors to your site— per ad dollar is of prime importance.

A response is indicated by either providing leads for future sales or the sales themselves. A response also could include the downloading of a piece of software. If your objective is to actually make a sale or have the viewer complete an action, then the number of responses per ad dollar is of prime importance.

Now let’s see how impressions, click-throughs, and responses play out in the alphabet soup of Net advertising.

CPM or Cost per Thousand Impressions

You want to get the best bang for your ad buck, right? So knowing about CPM—or cost per thousand impressions—is important.

CPM is the number of times your ad is viewed. Another way to say it is the number of eyeballs that see your ad. When you buy based on CPM, you’re paying each time a consumer views your ad. Click-throughs to your site and sales are not your prime objective here. Brand or image awareness is. Compare it to the FedEx or UPS commercials on TV.

They don’t want you to take action right then and there, but to have you remember them when you’re ready to ship something.

You calculate CPM in this way. CPM is the total ad cost divided by the total possible impressions—or eyeballs that see your ad—in thousands. The lower the CPM, the lower the cost to reach your audience. For example, an ad that costs $5,000 and is seen by 100,000 people will have a CPM of $50.00 (5,000 divided by 100). The ad is costing you $50.00 to reach 1,000 viewers of a Web site or receivers of an email message or newsletter. Today, CPMs can run as low as $3 or as high as $75. Run of site ads have a lower CPM than ads that reside on targeted pages of a Web site. For example, if you sell sporting goods and buy a banner ad on Yahoo! that appears every time someone does a search on sports, that will carry a higher CPM than if your ad appeared randomly across the whole Web site.

CPC or Cost per Click

Impressions are good for branding or making shoppers aware of your eBusiness. But if you want to pay only for consumers who actually open your ad and view it, then you want to buy advertising based on CPC—or cost per click.

CPC is the number of times your ad is clicked or how many people actually go to the URL you are advertising. Your objective is to have them “open your direct mail envelope” and view your offer. Currently, you can expect anywhere from about a half of a percent to a 3% click-through rate on a CPC ad. The rate depends on how strong your offer is to the consumer.

Keep in mind that consumers on the Web are bombarded by literally thousands of ad messages every day in the form of banner ads, email promotions, and ads in newsletters that they subscribe to. Like you and I, consumers have developed a subconscious filtering system to filter out most of these ads. So you have quite a difficult time rising above this din of advertising.

How can you even up the odds?

Consistency First of all, you must run your ads enough times to break through the consumer’s awareness level. Most advertising experts claim that you must run the same ad at least three times in the same place before it begins to register with your audience.

Visibility There are a number of factors that can influence the impact of your ad and get the consumer to “open it.” First is the size of your ad. If you’re using a banner ad, then obviously larger ads have more impact. Where the banner ad is placed on a Web page also affects an ad’s impact. Having your ad appear “above the fold”—being seen as soon as the page loads without scrolling down to see it—is important for visibility.

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