e-Marketing - Paid Advertising

Paid advertising will, of course, usually increase exposure. There are many advertising options available, including: banner ads, paid listings in portal sites, pay-per-click links, pay-per-sale advertising, paid ads in targeted e-mail newsletters, and opt-in e-mail advertising (Wilson, Eight 5-7). While it is important to consider budget constraints, some methods might be worth the investment.

Banner Ads Banner ads, usually sold on a CPM (cost per thousand page views), are “468x60 pixel animated and linked graphic ads that appear at the top of a commercial webpage” (Wilson, Eight 5). Although they can be expensive initially, each sale decreases the incremental cost.

Paid Listings in Portal Sites Another way to get noticed is by paying for a listing under a specific category in a portal site. The investment necessary is either a percentage of the sales or a flat fee. Web sites, such as MSN, offer package deals to clients. MSN strategically places the company name in several different verticals, or channels (Foster). For example, Fossil watches can be found in the Shopping channel, as well as the Love and Relationships channel as a gift for a loved one.

Pay-per-click Links and Pay-per-sale Advertising There are two basic ways to pay for advertisements: pay-per-click (PPC) and pay-per-action (PPA). Pay-per-click advertisers are paid based on the amount of traffic they generate, regardless of the resulting sales or desired actions. PPC search engines allow you to “basically buy your way up the ladder” of search results, with a very short turnaround time (Ward 1). PPA advertisers are only paid when sales or subscriptions are generated. According to Scott Owens, the type of advertising used depends on the conversion rate, what portion of visitors buy or perform some other desired action, and cost per conversion for each type of advertising. Owens suggests that a company request pay-per-action billing, so there is no cost if revenue is not generated from the advertising. Web traffic tracking software allows you to generate reports of page requests made on your site. It is important to count not only the page requests, but also where the requests came from. This way, you can see where your advertising is most efficient (Litteken). There is a continuum of risk as you move from sponsorship-based to commission-based or pay-per-sale-based advertising; the risk for the advertising is transferred from the advertiser to the site containing the ad. In a sponsorship advertising arrangement, the advertiser pays the same rate regardless of the number of hits the site receives. Additionally, there is no risk for the site hosting the advertisement. With banner ads, there is less risk for the advertiser and more for the site hosting the ad. The advertiser buying the banner pays for each view regardless of clicks generated. These banners are the on-line version of a traditional pay-per-placement ad. The pay-per-click model that is most commonly used is paid for like a prospecting fee and transfers more of the risk to the advertiser. If the site does not provide traffic from the ad, they do not get paid. The commission model, also referred to as pay-per-sale or per-action, transfers all the risk to the site hosting the advertisement. They earn no money if no sales result from the ad. This practice is sometimes structured as an affiliate program (Srinivasan).

Ads in Targeted E-mail Newsletters Purchasing a short, compelling text ad in an e-zine allows you to reach a specific target audience without spending a fortune (Rickman 1). Some web sites offer help with choosing online publications and web sites to post announcements on. These personalized promotion plans can be “tailored to your situation and Web site promotion services” (Rickman 1).

Opt-in E-mail Advertising Finally, opt-in e-mail advertising “involves sending a stand-alone ad for your business to individuals who have volunteered to receive information” from you or your business (Wilson, Eight 6). The purpose of opt-in e-mail advertising is to build up a list of people who are loyal to your site and interested in what you have to offer. It is important to get consumers’ permission before including them in the mailing list. Otherwise, they are involuntarily placed on an opt-out list, demanding that they unsubscribe if they do not want to receive messages. As with all the email strategies above, the more attractive the e-mail, the more effective it will be. It is best to use HTML formatted e-mails, if possible (Ellis). The pros and cons of each paid advertising strategy must be carefully weighed before choosing to invest in the promotion.

Banner ads can be useful in driving site traffic, although they seem to only give the benefit of increased exposure and brand recognition, poor strategies for sites that must justify their costs. In most cases, unless the ad is particularly catchy, banners do not lead to a high click-through rate. For this reason, many advertisers demand pay-per-click or pay-per-sale pricing on banner ads. Often, pay-per-placement rates are too expensive because of poor click through rates (Wilson, Pros).

Similarly, paid listings in portal sites, such as ads with Yahoo!, can be hit or miss depending on how they are displayed. When the ad is displayed as a placement in search results, such as Overture, a paid listing can be extremely successful. This is especially the case in search engines with wide distribution. The disadvantage to paid listings is that buying a listing under poorly selected keywords words can get expensive quickly, because they generate clicks from visitors that did not intend to view that site. For example if a site that sells organic strawberries bought the keyword fresh fruit they may end up paying for clicks from customers with no intention of buying strawberries but instead are looking for other fruits or fruit baskets. Once people realize they are on the wrong web page, they quickly leave without buying. Therefore, the best strategy is to carefully consider which keywords to buy and evaluate the results often (Sullivan, Google). Pay-per-click links and pay-per-sale advertising are different from traditional off-line advertising, because the advertiser has less risk in paying for an ad that produces no results (Srinivasan). The key is to consider the amount of risk that you are willing to incur with the ad. The pay-per-sale model or pay-per-action model also reduces the risk to the advertiser but often at a high cost for actual results (Owens). Ads in targeted e-mail newsletters can also be costly depending on the pricing model. The same considerations apply here in the choice of pay-for-placement versus pay-per-action and pay-per-click. Opt-in e-mail advertising for your own list is a great way to build a community around your site and communicate regularly with your customers. Just like other e-mail marketing strategies, the message in the e-mail must be something that interests your customers; otherwise, the response rate will be extremely low. The advantage of using this strategy is the relatively low cost to the advertiser.