Internet Advertising Models

Following publication of the last two articles on Internet marketing, we were asked to give a little more information about Internet advertising models. We are happy to oblige!

For the sake of brevity, we won't repeat the content of the previous articles – if you need information on avoiding the hype of Internet marketing, or you want explanations of the acronyms, please refer to the May and June 2002 articles.

In some of the descriptions below, we will use Google (www.google.com) to illustrate our points, not because we have any affiliations with them, but because they are probably one of the leaders in finding new ways to channel your Internet advertising budget.

Perhaps the easiest way to illustrate how the market is moving is to describe the three basic models: Impressions, Click-Through's and Affiliate Sales. The basic differences are that the first is remote from the sale; the second is closer; the third is based on reward.

Impressions:

This was the original advertising model, whereby the advertiser or their marketing agent creates a banner ad and pays for this to be displayed on another company's web site. In the height of the dot-com boom, advertising rates were very high – mostly because the dot.com's had lots of investor dosh to spend. Today you will commonly see rates of £15-£45 per 1000 impressions. (An 'impression' occurs every time the banner is displayed on the site, irrespective of whether the viewer notices it, reads it or clicks on it.)

Whilst it is technically possible to map the percentage of impressions to sales, the figures wouldn't look that great. Bear in mind that the sale (or other desired action) will occur only when the visitor gets to your site, therefore, if only 1-2% of people who see the banner click on it, and of these only 1-2% buy goods, you might have to pay for a thousand impressions to achieve one sale.

For an illustration of an advertising programme based on Impressions go to this site:
https://adwords.google.com/AdWords/Welcome.html  

Click-Through's:

This model means that as a seller, you pay a fee only when a visitor goes to your site. If they see your banner ad and ignore it – you don't pay. (Of course if this happens a lot, you do need to ask the question of whether the banner is good enough.)

Google is the master at this scheme. Their Select Ads programme displays ads alongside the results of Searches performed on similar 'keywords'. Again, rather than go into the full details here, take a look at the overview on their site:
https://adwords.google.com/select/overview.html 

The unique feature of Google Select Ads is that you can play around with different setting 'keywords' and 'prices per click', which enable your ad to appear higher in the ranking. You can also set a daily spending limit and a time period for your advertising campaign.

Apart from a hiccup on the day that we write this article - Google reported that our campaign for Web Audits was priced at $50,000 per click-through instead of $0.05 (slight panic on our part!! – but it was Google's error), the level of reporting is excellent.

Affiliate Sales:

Affiliate programmes are becoming quite popular – mostly because the schemes allow advertisers (i.e. affiliates) to sign-up for free and the seller only pays for advertising when sales are achieved. The other main benefit is that coverage is far more widespread.

Whilst some companies operate their own affiliate programmes, many companies choose to operate through a broker who will handle all of the tracking and administration. Some of the leading brokers in the field are:

Commission Junction www.cj.com 
Trade Doubler www.tradedoubler.com 
Affiliate Window www.affiliatewindow.com 

The seller pays an initial registration and monthly fees to the broker, who will inform affiliates of the commission-earning opportunities. The affiliate will decide whether the products or services are relevant to their site. (Relevance is important to most affiliates - but you will find sites that comprise solely of commission-earnings ads!). The seller will normally visit the Affiliates' site to verify that the content is appropriate to their image.

Commission rates are usually 'one-tier', but some programmes do pay on a two-tier basis. This means that an Affiliate who has recruited others to the network will get two levels of commission: a commission for each direct sale they make and a smaller commission for sales that their recruits make.


As always, there is much more that could be covered, but hopefully, you will see from the links how these programmes work. Please contact us if you need help or further advice.

 

This article was written by Bernie Vincent of The Eminent Trading Company Limited

Email: bernie@ebusiness-gateway.co.uk 

© The Eminent Trading Company Limited 2003.

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