Targeting Is Key to Ad Success, Right? Not So Fast

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What can possibly be wrong with selecting the best possible sites for your banner ad, rather than just scattering your message any old place? Traditional marketers believe in targeting. They use it all the time. Why not use it on the Web?

The reason is that the Web is not traditional marketing. There has been dynamic growth in Web advertising in the last couple of years with pages being created very quickly. There is a glut of unsold ad space, much of which is inexpensive, and all of which can be it can be measured and tracked.

There are three categories of Web ad space:

• Run of network which is very cheap - $4 to $6 per thousand impressions - but not undesirable.

• Affinity group space for categories such as Sports, Business, Travel. This space is more expensive - $10 to $20 per thousand impressions - but can be a good value. This space is not branded.

• Branded space. This is the most expensive - $30 to $70 per thousand impressions - and often has a very low response.

A 1-percent response rate on the Web is good. A good response in direct mail is 2 percent, but it costs a lot more to get it. Of course, a response in direct mail may be a sale, while a response on the Web is only a single step on the road to a sale. If you are going to pay a lot more for targeting, the targeting better pay dividends.

For example, $6 per thousand impressions for RON with a response rate of 1 percent translates into 60 cents per response. If someone says that you should be on this really cool Web site that costs $42 per thousand impressions, how much better will the $42 site have to be to give you responses at 60 cents each? The $42 site must yield a response rate of more than 7 percent to be better than RON. Few Web sites offer that type of response rate.

So, if you should not target, how should you decide where to place your advertising to make sure that you are reaching the right people?

Flycast CEO George Garrick recommends using RON to test. He calls it zero-based media buying. Do no targeting. Just throw ads out there. Within a few days, you can figure out where you are getting your response. You can group your responses by category (sports, business, entertainment) or by individual site. Or, even better, you can create your own category, "People who respond to ads about my product." You cannot do that in any other media.

Garrick recommends clients begin with advertising on all 780 Flycast sites for a week to compare the response rates.

When Casio ran a RON ad for a digital camera, the best category was Travel. Sites aimed at women, games and sports are definitely not winners. Would anyone have guessed this without this test? Not likely. Further, this test can be conducted in a week. Responses are tabulated from all sites daily, even hourly if you want. Rapidly knowing what works, you can immediately place your digital camera ads on the right sites, dropping the less responsive ones. You cannot do that in any other media. It takes weeks to know using direct mail, and you may never really know using TV or print.

Response rate is only a part of the story. You have to factor in the cost of the space.

Would concentration on travel sites be a good idea for Casio?

At a $15 CPM, travel sites are barely a better buy than RON. Casio should concentrate on Travel sites, but only after testing whether the conversion rate of prospects that come from Travel is equal to or better than those who come from RON.

Which would be the best site to advertise Carpoint? Automotive? Of course. But how about sports, shopping and travel? Would advertising on these sites be better or worse than RON? Look at the CPM to know the answer.

Once you have decided where to place your ads, you must decide when to run them. You have a choice of day of the week and hour of the day. Lets look at two advertiser response rates based on time of day.

Bank of America ads peak in the afternoon and evening. They are below average in the morning. Would this mean that B of A should advertise in the evening? Not necessarily. Perhaps their conversion rate from responses to leads is greater with people who call earlier in the day. This can be easily measured. Or, perhaps the lifetime value of early day responders is higher than that of evening responders.

CarPoint and Casio responses by hour of the day are almost the opposite of the Bank of America. Their best responses come in the morning hours, and tend to drop off in the afternoon and evening. Here is another area for rapid calculation and revision of the advertising mix.

These examples show that you cannot assume that conventional beliefs and practices hold true on the Web. Further, start from scratch and let the market tell you what does and doesn't work. And continually track, test and tune your program based on the wealth of data that is available.

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