Buying Web Advertising

The principles of web advertising are the same as for advertising in any other media. What you need to remember is the following:

• Who is your target group?
• Which web-sites appeal to this target group?
• How many visitors do these sites get?
• How much does it cost to advertise there?

Do the calculations ahead of time

Based upon the considerations above, you can calculate yourself how much you will spend to reach each user (exposure price/contact price). A very good click rate for an advertisement is 1%, so you can try to calculate how much each visitor to your landing page will cost you. If you pay 1¢ for each exposure of a front-page banner, and if one out of 100 users click on the banner, you're paying one buck per user on your page. - That is if you actually manage to get a 1% click rate (0,1% or even 0,01% have regretfully become more usual click through figures, mainly due to the "banner blindness" phenomenon).

So is web advertising worth the money? It can be, as long as you manage to make really good advertisments (so as to get a good click rate) and to make the most out of those visitors who click through (so as to get good conversion rates). But do your own calculations first: A good shopping web-site has perhaps a conversion rate of 5%; in other words, every twentieth user who comes to the site will make a purchase (or undertake a transaction, such as downloading a brochure or the like). In that case, with a click rate of 1% you're paying $20 per customer. If the average sale is for $50+ then it might be worth it. However, if the click rate drops or if the conversion rate drops to 1%, you can easily pay $100 or more per customer. Even that can pay off, if you are selling software for over $500 per purchase, or if you get good lifetime value from your clients.

Buyer's market

Where do you get the best advertising contracts? Well, it's a buyer's market, so you can negotiate with most sites. Most advertising salesmen also have some less popular formats or locations further down the structure for less money. But keep in mind that click rates sink proportional to the size of the advertisement and how low it appears on the page.

You will get the most out of your advertising budget by aiming at your target group as closely as possible. If you sell car parts, then you will get a better click rate for the money on Yellow Pages auto parts than on Yellow Pages as a whole. Therefore: Place the advertisement in a simple, relevant sub-section of a web-site. It is cheaper, and response rates are better.

You should also consider buying catalog listings or PPC-advertising as an alternative to the traditional banner-ad.