RE: UKNM: Advertising might actually be dead

[James Tarin]

> ----------

>

From: Tom Hukins[SMTP:tomeborcom [dot] com]

>

Reply To: uk-netmarketingchinwag [dot] com

> Sent: 	Wednesday, March 04, 1998 8:16 PM

>

To: uk-netmarketingchinwag [dot] com

> Subject: 	Re: UKNM: Advertising might actually be dead

> 

> Tom Hukins wrote:

> 

	>How do we value banners? The answer to this is simple: buyers

will be

	>willing to pay anything less than their cost per objective. If

an

	>impression is worth X, then buyers will pay anything less than

X. 


mmm.....  I cannot believe that this is correct. As an advertiser, I am

not only interested in the fact that my marginal revenue exceeds my

marginal costs. Surely I am acutely aware of the fact that I am working

in a competitive environment, and I have to pay less than my competitors

for achieving the same objective if I want to gain a commercial

advantage over them in this context. Additionally, although the above

statement is fine in the theoretical situation where I have no

constraints on my budget, I am generally working in a capitally rationed

situation and am trying to achieve maximum results for my available

budget, not just results whose value exceeds my expenditure.


	><Sellers

	>will be willing to accept anything more than the cost of

hosting the

	>banners. Ideally they will sell at a price which makes them a

profit, but

	>if this isn't possible they'll sell at the highest price,

provided that

	>price is less than the cost of hosting the advert. 


Similarly, I am not so sure of this as a viable business model. In a

situation where I have capacity, my marginal cost of hosting the banner

is zero. However, if I sell my banners at prices which do not make me a

profit, I am conducting a non-viable business model (unless of course I

am hoping to build market share and then gain my revenue stream from

somewhere else (e.g. Microsoft Internet Explorer))


	james

> -------------------------------------------

> James Tarin

> Director of Strategy

> Clarity Communications Ltd

> 1 Long Lane

> London EC1A 9HA

> 

> Voice: +44 171 397 2900

> Fax: +44 171 397 2937

> 

>