Tap into performance based Internet advertising to increase sales at your fixed cost
Response Magazine Guest Editorial
With retail eCommerce sales at $52 billion in 2002 projected to be $118b by 2005, and DRTV industry leaders like Thane pulling in $30 million in sales from their internet activities, it’s no longer a question of can the Internet make advertisers money, but how can they tap into growing goldmine where 68% of the US will be online by 2005.
The best news to DRTV advertisers is that 71% of online ad spending will be performance-based (read PI or CPA) by 2005, according to Forrester, an online research firm.
The wide variety of methods to secure sales from the internet include not only the traditional banner ad campaigns (a .5% conversion might look good to direct mail marketers), but search engine optimization (SEO), used by 79% of US Internet site visitors, controversial pop-up and email ads as well as affiliate programs which allow management of campaign offers, their payouts, creative materials, and realtime tracking of results (yes, it’s all instantaneous on the ‘net).
On average, for advertisers who employ all these services, 25% of sales usually come from affiliate programs, 10-20% from SEO, another 10-20% from permission email and the remainder from shopping & auction sites and a variety of “traffic” placement, which can be banners, coregistration, textlinks, sponsorships, and the like.
- Some advertisers may use only email advertising for exceptional conversions ranging from 20-30%, with results in the 30-80% range when done well.
- SEO will only be appropriate if the costs for the keywords and phrases are low enough and conversion is good. For others, SEO may be ridiculously expensive or the appropriate keywords too vague and complicated to recover media expenses.
- Affiliate programs benefit advertisers with many products, but even a single-product advertiser can have the benefits of 24/7 realtime results tracking and creative serving at a reasonable cost.
Conversion is the key to all Internet advertising. Many web sites accept Cost Per Acquisition (CPA) advertising, which is akin to Per Inquiry (PI), where the payment to the web site is based on sales performance at a pre-arranged cost per order. Like PI in other media, web sites run CPA when demand is low.
Advertisers with CPM and Cost-per-click (CPC) campaigns will almost always get inventory before CPA offers. CPM and CPC offer web site accounting departments the benefit of projecting sales as each site knows how many impressions they will devote to each CPM campaign and the average percentage of their visitors that click-through.
While CPM and CPC campaigns have some risk to them in that the advertiser pays for impressions served or visitor actions to click, but not for each consumer purchase, these methods are the best ways to gain access to the largest and best quality sites and therefore, significant Internet breadth of exposure. Testing, just as in all other direct response campaigns, minimizes all risk. With test amounts averaging $1000/web site, using only sites with a minimum of 1 mm visitors per month and hundreds of thousands of sites available to choose from, an advertiser can learn quickly what conversion to expect after web site visitors have clicked on creative.
The variety of creatives and formats for testing are endless as is the focus towards obtaining the best conversion and overall lifetime value of the consumer. As the advertiser collects information supplied by their consumer, a dialogue begins, whereby the advertiser continues to feed information to the consumer with their permission through email, honing the message to increase sales to their base. 86% of consumers have requested to be on email lists or have made a purchase from email marketing. It’s paying off, as repeat purchases online make up 53% of Internet revenues, up from 40% in 2000. 
The Internet: the consumers are there and growing; campaign costs are low; and the speed of results is nearly instantaneous. The ability to strengthen the consumer relationship, increasing retention and revenues justifies adding Internet to enhance the sales of any direct response advertising campaign.
1 Jupiter Internet Population Model, 9/00 US only
2 Marty Fahncke, Thane Inc., ERA 2002 Internet panel
3 Jupiter Internet Population Model, 4/00 US only
5 DMA State of the Industry Report 2001-2002
6 Study by Digital Impact
published February 2003 in Response Magazine
Sales on the Internet – Search Engine Advertising – 15-25% of Internet sales
Response Magazine, March 2003
You think if you built it, (your web site), they will come. That’s partly true. 23% of Internet consumers enter the exact web site address (URL) at their browser when shopping. Another 28% will enter the name of the product when searching to buy.
Using keyword phrases like “anti-virus” sold 300 packages per day (@ $39) for a software seller spending $20,000/mo. in search engine advertising. Nice 18:1 ROI ratio. Time to manage this kind of campaign: from as little as 10 minutes to 2 hours a day.
Search advertising is made up of two key projects: search engine optimization (SEO), which starts with site planning through launch and pay-for-performance which is managed much like a DRTV campaign by constantly evaluating the sales conversion of visits on a cost-per-click (CPC) basis.
SEO consists of evaluating the site to maximize the traffic driven to your site by engines, indexes, directories and crawlers; basically, all the different Internet entities that find text and images in your site that would match a potential visitor’s search. This process includes carefully building “meta tags,” phrases, titles and descriptions for each page and submitting this information for acceptance to the likes of AltaVista, Open Directory, Inktomi, etc. There are hundreds of search engines you could submit to drive traffic to you, but 90% of traffic usually comes from just a handful.
David Yehaskel, search engine guru, has some advice on optimization:
1) Work on good content and build and submit 1 page per product; search engines like lots of text.
2) Find a good, free submission service
3) Get as many links pointing to you as possible from other sites. “You never can have enough.” That means soliciting other web sites to post a link to yours, often done by posting one of theirs in trade, or by paying a fee or commission for sites to drive traffic to yours.
Marty Fahncke of Thane says if you are going to hire an outside firm to do your optimization, get lots of strong references. Lots of companies claim to do this that may not be doing it well.
Pay for Placement
Paying search engines for each visitor is mostly done on a CPC basis ranging from $.05 to $1. Since a visit doesn’t mean a sale, advertisers manage their paid keyword placements manually, with software they buy or lease or using outside firms.
Consistently across the board, everyone interviewed for this article always picked Google as the #1 source. Fahncke says it’s the #1 most important with highest volume for best conversion.
Strategy by consensus: pay to appear in the top slot (or at least top three). That insures being picked up by the largest number of services, such as at Yahoo through Overture or AltaVista, Ask Jeeves and AOL through Google.
DentalPlans enjoys a 40% profit from Google. In January, 6100 visits from Google delivered 103 plans. Break-even was back at 61 sales. They use a hefty 8000 keywords/phrases which tells you how sophisticated the analysis can get.
Jon Moises, Quicken, advises rookies to make sure not to pick “the most popular terms. Relevance is key.” For DentalPlans, a keyword phrase like “dental insurance” is key. FYI: half of all searches are 2-4 words in length.
Evan Weber, DentalPlans, says, “Everything is volume.” Every web page submitted to all the various engines/portals generates that many more visitors. Encouraging every synergistic site to exchange or carry links boosts your rank with search solution companies.
Getting started: See Google’s Overview section and search term suggestion tool. Start with 1-20 keywords and phrases and as little as $5. For beginners: searchenginewatch.com and selfpromotion.com.
Fahncke predicts that in 5 years, 50% of sales will come from the Internet. This is a great time to get in and learn while the education is cheap. Search advertising may well be the most efficient ad dollar you spend.
2 NPD Search & Portal Site Study, Winter 2000
Keyword Cost-Per-Click Ad Placement: Campaigns using keywords purchased on a cost-per-click (or ppc, pay-per-click) need to be managed and optimized to yield the advertiser’s cost-per-sale goal. Companies that sell keywords urge advertisers to pay high cost-per-clicks to gain top placement without regard to conversion of those keywords. Work needs to be done to select keywords at prices that will convert successfully.
Contextual Keyword Advertising: Separate from keyword pay-for-placement, serves visitors ads while they may be reading articles, hence the reference to in the context of their surfing of the web, and charges a cost-per-visitor or cost-per-click to advertisers.
Search Engine Optimization: Critical to success of any paid search marketing efforts is to have the site ready to be searched easily and successfully by the various search engine robots. Metatags for each page of a website must be in place and complete with Title, Description and Keywords of appropriate lengths for ready acceptance. Text on the website needs to contain keywords used to attract traffic to any given page. Once these activities are complete, submission to the search engines can be done and again thereafter with new changes to the site.
Call 360-437-5092 or email info at dawnpilotDOTcom to learn more about Search Marketing.
Affiliate Programs –No-Risk Internet Advertising that Sells
-Response Magazine, June 2003
What’s better than global ad exposure 24/7 at your fixed media cost (CPO) with a system for 24/7 promotion, traffic, sales tracking & payment? Affiliate programs, websites that run ad campaigns on a PI/CPA basis driving sales at advertiser websites, were projected to represent 25% of Internet sales. 
DRTV companies should feel comfortable building affiliate programs. What is successful with consumers in DRTV translates almost identically in the Internet space. Consumers want a strong perceived value, ease & speed to purchase, quick & accurate fulfillment & customer service. Performance analysis and campaign massaging continue to be the key to success.
What attracts the strongest web site affiliates:
1. Good payouts: is your payout equal or better than your competition? Generally, advertisers post a % of sales. Programs that offer a 2nd tier payout for sites that persuade other sites to sign up under them are also attractive. Payout strategies include flexibility to pay more to the strongest sites as well as flat cost per sale for larger sites that prefer that kind of payment.
2. Realtime tracking: manual and delayed sales results are a turnoff to sites.
3. Lifetime earnings for ongoing sales from consumers that sites deliver are an important feature.
4. Attention to their special needs: sites like advertisers who address their creative requirements & work with them on special promotions.
Corey Newhouse of GreatBuyUSA says his 800 web sites/ad networks affiliates deliver 12% of Internet sales in their 1-2 year-old program. Corey uses Performics, one of the 4 big third-party affiliate solution companies like Commission Junction, BeFree & Linkshare. Companies like these host (for fees/commissions) a central location for advertisers like Corey to post the amount they offer per sale/lead, store creative and access a reporting system of sales results. They promote offers to thousands of member websites who then review & accept offers and post creative at their websites using unique links to accurately credit their site’s sales.
Getting Started – Posting and Promoting Your Affiliate Program
The process starts by building a description of the program, benefits of the product, the best audience for the product/service, payout to the web sites, developing and posting various sizes & kinds of creative, payment terms, an application and agreement (outlining indemnification, anti-spam and trademark protection policies) for them to join with a list of FAQs. A great source for guidance is AffStat. Next is the budget decision to host at home, lease from smaller hosts or the big 4.
Promotion with TV increased Internet sales conversion by five times in Shawn Collins’2 experience.
Free posting of advertisers’ programs is available by 40-some affiliate program directories who show offers to their website memberships. The web is also a huge resource for researching competition & potential sites to invite to accept an offer. Emailing of press releases and promotion to previous customers, web sites and affiliate directories is integral to any campaign.
Maintaining and Increasing Your Program or the Care & Feeding of Affiliates
Web sites may be attracted to sign up for your program, but fail to “activate,” or select and post your creative. Email reminders, enticements, participation in discussion groups and news about upcoming promotions will encourage activation and build strong ongoing relationships. Time devoted to the top performers is well spent, as many programs find that 5-20% of their affiliates deliver 80%+ of the affiliate program dollars.
Realtime tracking of sales results affords analysis of the number of ad exposures, the number of interested visitors who clicked on an ad, and, of course, the number of sales conversions. Testing can be done and evaluation made of every creative version as well as each affiliate.
Affiliate programs are really a situation where you can build it and they will come.
Good starting places to learn more are Successful Affiliate Marketing for Merchants by Shawn Collins2, and iAmfa.org.
2 AffStat: http://hop.clickbank.net/?affinfo/babylounge
Permission Email: It’s Not Spam When They Ask For It
As postal, media and call center costs increase, customer acquisition & retention through email messages delivered below a penny/name looks pretty attractive. 82% of marketers felt email was the most effective ad method; 49% thought TV was.
Spam is a concern, but emailing your own customer or those who have given permission (opted-in) is certainly acceptable when you follow some self-imposed industry guidelines. Special offers are welcome when requested. The opportunity to upsell products based on previous purchases, survey, retain relationships and collect further data to improve products/services thereby increasing sales at such a low cost is invaluable.
One successful weight-loss company’s sole advertising is permission email, messages sent to consumers who registered at websites or otherwise agreed to receive newsletters and promotions and strictly on a cost per acquisition (CPA) basis: risk-free and spam-free.
Campaign expansion to larger, higher quality sites on a CPM basis, as low as $.35/1,000 emails is cheap in today’s soft ad market. One software company spent $3 million last year on 300 million emails per month sent by 4000+ web sites/email companies with a 2-3:1 ROI which can be bought for less than half that today.
CPM campaigns, like DRTV, require close attention to metrics. When a test email goes out to 1mm visitors, how many/what % clicked on the ad (click thru rate or CTR)? Industry average in 2002 was .3% for b2c offers.
CTR may vary widely depending upon the fit between a website’s audience and the offer. Conversion is likely to be a much more stable number across the campaign.
Conversion is the next critical metric. Once visitors clicked, 1-5% completed the action for 86% of surveyed advertisers; 6-10% completed actions for another 12%.
Best-performing email offers have impulsive appeal like DRTV offers. Anything free or inexpensive, & lead generators all work well. Not that high-ticket offers don’t succeed: computers and travel are two of the biggest categories on the Internet. Success falls back on DRTV’s strength: a strong perceived value.
Build your list by offering newsletters as well as special offers. Send as often as once a week & always offer value. Watch Unsubscribe counts for feedback. Increase your income with advertising in your newsletters and opt-in list rental.
Expand your list and campaign more: “append,” or secure email names to your current customer base, barter services with other companies to send email ads to equal numbers of opt-in consumers. Rent lists of opt-in names from $10 to $200 per thousand depending on targeting. All campaigns require the test and roll-out method familiar in DRTV. Test quantities can vary from tens of thousands for very niche lists to 1-2mm names. Roll-out quantities can be up to 40+mm for the largest files.
Ads with a single advertiser, solo emails, need creative in 2 formats, all text as well as one in HTML. Web visitors are still split on this preference. Prepare Subject: and From: lines. Newsletter ads are shared with other advertisers and vary from text to text/graphic to banner ads. Test and tweak creative often to improve results.
The DMA champions the email industry’s self-regulation. To safely build email creative provide:
2) company contact info or a link to same
3) the ability to Unsubscribe (decline further email)
4) an honest Subject line to the email
Seems simple enough, right? For more info, go to www.the-dma.org/guidelines/onlineguidelines2.
eMarketer makes an excellent suggestion to maintain the permission trail from how you secured permission from the consumer (list, email drop or date/time stamp at your site) and honor all requests to Unsubscribe expeditiously.
Do these things to join the ranks of the successful email marketers collecting demographics, providing customizable content, targeting by purchase history and geography and enjoy CTR rates of top campaigns of 5-20%.
To learn more, opt-in for free newsletters at: eMarketer.com, MarketingSherpa.com or pick up Seth Godin’s Permission Marketing
1 Forrester, Aug. 2001/eMarketer, Strategies, Stats, Technologies & Tools, Aug. 2002
2 eDialog survey 2002
3 eMarketer b2c survey 2002
4 eMarketer 2002
Don’t Abandon the Banner:
Banner Advertising’s Bad Rap is Undeserved
When 71% of online visitors want advertisers to reach them with traditional banner ads and banners were 33% of online spending (Jan-June 2002), projected to $8.1 billion in 2005, how do advertisers mind their budgets with success despite decreasing click-thru rates?
Testing and Conversion
“Less is more,” advises Matt Ramirez, as Hello Direct moves away from big skyscraper ads. “Big, flashy ads did not work.” Smaller, and a lot less flashy ads are the key to their success.
Laurie Beasley, Beasley Direct, suggests test quantities of 12+ creatives (six minimum ads; never fewer than three) to test marketing & creative approaches, offers and price points based on client goals.
Andrew Witty, President, I-MAX Direct, recommends a media test with a sizable network to track and optimize with a cap of 1 message/visitor/day. “The click-thru rate may be under .5% today, but it’s all about price.”
Neil Barrett, Advertising On The Internet, summarizes traffic success:
- Optimize placement
- Refresh creative often
- Use action words such as “click here” & offer information
- Keep the ad sizes to standard sizes and recommended file sizes
Optimize by negotiating for multiple placements, and “higher” (more visible) placement in a site. Everyone benefits with improved placement. A wide variety of creative sizes, newsletter and solo email versions increase venues & frequency.
Review payout to sweeten a deal. One telecom advertiser doubled site income using the CPA over the CPC payout and fired up promotion & sales.
Pay more to target when run-of-site performs. Conversions often improve. Working a niche is key to long-term success for companies like ClubMom, explaining why sponsorship dollars are 24% of online expenditures.
45% of banner advertising is sold on a CPM basis ($1-4) while performance-based payouts (CPA) are on the upswing, hitting 15% (Jan-June 2002). Cost-per-click and hybrid models, combinations of CPM, CPC, and CPA make up the difference.
Banner exchanges, bartering by placing ads on your site for those that do the same for you, are prolific. Decide whether devoting time & site real estate syncs with your marketing/creative goals and management resources. The best return for your time invested is to handpick sites that synergistically fit your goals and content.
Creative sizes vary from the well-known full (468×60) banner to a handful of standard formats (www.iab.net/standards/adunits.asp). Limit file sizes to 10-15k for maximum acceptance.
Lead generation through co-registration, text offers where consumers clicking on a checkbox agree to give up personal information delivered in fields, such as name, email, physical address, and phone for a CPC price, is a good “list-building tool,” says Witty, who warns, “don’t sit on that lead.” Prices average $.10-$.50+ per coreg.
Traffic can also be generated simply & successfully by textlinks, promotional copy underscored with a hyperlink. Strong traffic costs $.30-.50 per click.
Intrusive pop-ups have annoyed so many that some sites decline this format. Many advertisers, however, use pop-ups effectively at their own sites to increase the numbers of completed forms. Many sites accept pop-unders, a subtler version seen as visitors exit. Both versions are sold generally on a CPM basis. Good quantities average $2 CPM.
Rich media creative ($30-40) is growing exponentially with increased capacity to receive large files with speed. Two leaders of the trend in eye-catching creative are Eyeblaster & Shoshkeles. See http://www.emerginginterest.com/ for the latest news.
Results can be tracked & analyzed instantly. “Cookies” allow advertisers to track visitors. Individual tracking URLs assigned to each site give credit where it’s due. Cookie duration varies from 30 days to lifetime. Longer is the obvious site preference.
Oh, by the way, there is “little correlation between click-thru rates and sales conversion” according to a study by Atlas DMT. In fact, 13% of visitors are repeat. Banners proved to be an “effective tool to increase lifetime value” as conversion from previous visitors was 2.5 times greater than first-timers.
1 eMarketer 2002, WSJ Oct. 2001
2 IAB Internet Advertising Revenue Report, Sept. 2002
3 eMarketer, Dec. 2002, US Online Advertising dollars
4 Kogan Page Limited, 1997
5 IAB Internet Advertising Revenue Report, Sept. 2002
6 eMarketer, Dec. 2002
7 IAB Internet Advertising Revenue Report, Sept. 2002
8 eMarketer, Dec. 2002
9 IAB.net, Case Studies, Sales Conversion, “Proof That Online Advertising Works”