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The thrilla in Manila, the rumble in the jungle, the click vs. the
impression. Many believe that today's match-up in the internet advertising
arena will go down with the greatest of all time.
There is no argument that the web has been accepted by marketers
as a targetable, measurable, and result-oriented medium. But the
way we buy space within this medium has caused great debate.
At first glance, the tale of the tape seems fairly even: Two distinctly
different pricing models that have landed on the desks of every
online media buyer in the country. Which one will be victorious,
and why?
And In The Impression Corner...
Weighing in on a CPM (cost per thousand) pricing model, this top
contender has found great success in achieving any advertising objective.
This fighter has been trained to adhere to all of the fundamental
direct marketing principles of the past. After beating out the "flat
monthly rate" model early on, this contender has enjoyed great
success.
And In The Click Corner...
This contender's name says it all, cost-per-click. The advertiser
pays based only on the number of clicks received. This brash pricing
model seems like a sure thing. You want guaranteed results, you
want clicks, then maybe this is the safe bet…or is it?
Come Out Fighting...
So you're the advertiser and you have $1,000 to spend on your online
advertising program this month. Which model should you use?
Using the cost-per-impression model, you can buy 100,000 impressions.
Using the cost-per-click model, you can buy 1000 clicks.
In the CPM pricing model, the overall cost is fixed, with the variable
being our response rate.
In the cost-per-click model, the cost is directly proportional to
the response rate.
The Cost-Per-Click Model Is On The Ropes...
The removal of the fixed cost regardless of the response rate is
what eradicates the 'direct response' component when using the cost-per-click
model.
Why?
Well, as a marketer, you would most likely want to test various
creatives, or offers, throughout the program. Perhaps you are going
to introduce a special premium, which is going to give a dramatic
rise in your overall click-through rate.
Or, perhaps you are changing your sales model to perform a multi-staged
sales effort. So you're giving away something for free in exchange
for acquiring U.S. mail and/or email address information. In effect,
with the cost-per-click model, you wind up being penalized for generating
more responses.
The Knock-Out Punch...
While the cost-per-click model seems like the would-be winner, its
attractiveness quickly wears off as the web-marketer jumps from
'amateur' to 'pro.' The web is an interactive, flexible direct-response
medium, which operates most successfully within the cost-per-impression
model.
Very similar to a direct mail program, the banner's creative is
a hybrid combination of a direct mail piece's outer envelope, as
well as the offer, with its localized 'call to action' being the
click. This is not a new formula that needs testing. But rather,
a successful formula that has made a successful transition into
a new medium.
And The Winner, By Knockout...
Cost-per-impression!
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