Re: UKNM: Search Engines

[Ray Taylor]

D.Dias <

ddiasbreakbeat [dot] co [dot] uk

> said:


> eg. let's say you sell posters for around 4 quid, and the average

> order comprises two posters, giving you a total of 8 pounds per average

> order.

>

> You then buy 100,000 banner impressions at a CPM rate of say 25 pounds.

> Which costs you 2500 pounds. You get a click thru rate of [optimistically]

> 1%. Of these 1% [1000 people], 2.5% actually make a purchase [25 orders].

>

> It doesn't take a genius to work out that banner advertising in this

> instance isn't a particularly cost-effective way of generating sales.

> eg. spend 2500 to get 200 quid's worth of orders.

>


Alternatively, pay �10 per thousand, get 250,000 banners, improve your

creative such that the response rate doubles - 2% click through. That makes

5,000 clicks. At the same conversion rate, you get 125 orders at �20 each.


During our current (40p per click) promotion, we would actually guarantee

6,250 clicks for the same cost. So you can guess that we (a) can get better

than �10 per thousand rates and or (b) can get better than 2% click-through

(or we will lose money on the deal).


Looking at conversion, an �8 order, a �20 cost-per-order is obviously too

high. Unless there is a good chance of repeat orders.


The �20 cost should therefore be seen as a cost-per-acquisition.


Amazon probably pay a lot more, but then they don't have the benefit of

using eyeconomy to buy their advertising. But even so, they could bear

cost-per-acquisition equivalent to their initial order value, if not higher,

on the basis of repeat orders.


That's because they have a good services that produces repeat orders. Banner

advertising can't solve the problem of having a crap e-commerce site with

poor service and nothing worth buying on it.


Get the service right before wasting money advertising it.


Ray Taylor



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