How to Advertise Your Site on a Slim Budget
Web Marketing Today, Issue 50, November 1, 1998
You can do a lot to promote your site for free. And I hope you're doing many of the things listed in our article "32 Ways to Promote Your Website" (http://www.wilsonweb.com/articles/checklist.htm). But there comes a point where you need to outsource certain aspects of promotion in order to move up a notch in bringing traffic to your site.
First, though, you need to be clear about your goals. To oversimplify, there are two main goals for purchasing advertising on the Web: (1) developing name recognition for your business (branding) and (2) bringing visitors to your site so they will purchase your goods or services (direct marketing).
Branding Using Banner Advertising
The larger your company is or wants to be, the more important it is to develop a recognition of your name on the Internet. Your ideal is to become a household word. But failing that, you want people to recognize your name and associate good feelings with it, so they will prefer your products or services over your less-known competitors. (Much more information on this subject may be found at the Branding on the Web section of our Web Marketing Info Center. (http://www.wilsonweb.com/webmarket/branding.htm)
Branding deals with ad industry buzz words such as "impressions" and "page views." Clicking on the banner to visit your site is ideal, of course, but just seeing your banner there again and again will gradually reinforce the impression that you are an industry leader. A good example is IBM, whose e-business campaign is widely known.
Crunching CPMs and CTRs
But branding is expensive. Let's look at the numbers, something we hope will become second nature to you as you consider paying for advertising. The average banner ad is sold on the basis of CPM (cost per thousand "impressions" or "page views"), a metric inherited from traditional advertising media. The current average cost of banner ads is $35 CPM, or $35 for each 1,000 people who see your ad. Each "impression" at this rate would cost you 3.5 cents. (Another acronym you might run across is ROS, which stands for Run of Site, meaning displaying a banner ad at random throughout a particular website.)
The second important metric is CTR (click-through rate). This is the percentage of people who see your banner ad and click on it, thus being sent to your site. This rate has fallen from an average of 2% down to less than 1% currently. (Though the average click-through rates on our Web marketing and e-commerce sites is much higher, in the range of 3% to 6%, since our site is highly targeted, http://www.wilsonweb.com/ads/). So with a click-through rate of 1%, what would a visitor to your site cost you? 1% of 1,000 page views is 10 people. So with a $35 CPM ad campaign at 1% CTR, each visitor to your site costs you $3.50.
There's a third important metric: conversion rate. This is the percentage of visitors to your site who convert from shoppers into buyers, and actually purchase something from you. The conversion rate for first-time shoppers can vary from 0.5% to 5% (or perhaps more, depending upon your offer). Let's assume for a moment that the conversion rate on your site is 10% (which is very high!). That means that it takes 10 shoppers at $3.50 each to bring you one sale. So the initial sale cost (called the "customer acquisition cost") is $35. If the average sale on your site is $25 (of which your net profit is $5 to $10), you're losing money on every initial sale. (Note that the assumption of a 10% conversion rate may be ten times too high.)
However, many companies operate in this fashion. They lose money on the first sale, but work very hard at delighting their customers, so they make money in repeat sales in the long run. Now you can see the real crunch points in making money in an online store: (1) increasing the click-through rate, (2) increasing the conversion rate, (3) fine-tuning your fulfillment system and supply chain so you can provide the superb customer service that enables you to retain customers, and (4) marketing effectively to your existing customers. Many companies with a "no inventory drop-ship model" lose out on their ability to provide superb customer service, and eventually die because they can't retain customers for the lucrative second, third, and fourth time sales.
To recap: The branding approach that purchases strategically-placed banner ads costs out this way: 3.5 cents per page view, $3.50 per visitor to your site, and $35 (or much more) for the first sale.
Now don't get me wrong. Branding is very important if your goal is to be one of the few top online businesses in your industry a year or two from now. You talk to venture capitalists who share your dream, and you build your name with branding strategies. You've got to capture mindshare or be left in the ditch -- or perhaps the niche.
Niche League Techniques
The fact is that most of you don't have the capital to play in the Branding League. All is not lost -- not by any means. There is a Niche League, too. Niche League players aren't as interested in playing in the big leagues. They have a bottom line. They want to earn money now, not two or three years down the road like the Amazon.coms of this world. And many companies have developed very successful teams in this League. You can, too. Most companies in the Niche League set their goal not on branding but on transactions -- maximizing the number of transactions at the lowest possible cost per transaction. One of the keys (and there are several keys we can't talk about in this article) is to find a mix of less-expensive ways to advertise their site.
I want to suggest six advertising techniques that seem to offer the highest return on the dollar. (We're assuming, of course, that you have already built an effective website.) These are some of the strategies I am pursuing to increase traffic to my site, and each of these we'll be looking at in greater detail in future issues.
1. Public Relations
You can't pay to have your site mentioned positively in an article or news story. Such a mention could being you thousands of visitors overnight. How do you accomplish this? There are several inexpensive ways to send out news releases that will be picked up by both print and online media. Some of these include:- PR Newswire (http://www.prnewswire.com/) and Business Wire (http://www.businesswire.com/aboutbw/) both deal with traditional as well as online media.
- Internet News Bureau (http://www.newsbureau.com/welcome.cgi?1017) charges $225 per release, and also will assist in writing your release for you for an extra fee.
- Eric Ward's NetPOST (http://www.netpost.com) offers personalized releases via e-mail to journalists who have requested to receive such releases.
The trick here is to come up with something actually newsworthy about your company. Launching a website is no longer news. But a contest, an event, a new product or service might have the makings of a newsworthy story. I suggest you read Larry Chase's Essential Business Tactics for the Net (Wiley, 1998) for ideas. You can purchase a copy at discount from Amazon.com.
Another approach is to hire a public relations firm to help get your company press coverage. They will work with you to develop newsworthy events and use the relationships they've developed with the press to get you coverage. Outsourcing public relations may bring you much more traffic than you could get otherwise for a relatively low cost per visitor. Advice: shop around. You can find resources on public relations and writing news releases in our Web Marketing Info Center (http://www.wilsonweb.com/webmarket/pr.htm) as well as the Internet News Bureau (http://www.newsbureau.com/welcome.cgi?1017).
2. Low-Cost Banner Ads
The cost of banner ads averages $35 CPM. Most ad agencies work on a 15% commission, paid by the site owner that carries your banner. If you have only a few dollars to spend, there may be enough money in your project to make it worth their while. But if you have a larger budget, getting the right media agency is a real bargain and will save you lots of time and mistakes. (We can steer you to some trustworthy and competent agencies.)
For low cost solutions, however, you'll need to shop carefully, but you can purchase banner ads much more cheaply. Take a look at LinkExchange Express (http://www.linkexchange.com/compinfo/advertising/). Currently, they're offering two options:
- Untargeted Ads (LinkExchange Broadcast) that appear randomly throughout the 250,000-site LinkExchange network. Stated rates run from $8 to $10 CPM.
- Semi-Targeted Ads (LinkExchange Midcast) place your ad on sites within one of 22 top-level categories: arts & humanities, autos boats & planes, business, computer & Internet, culture & religion, education & reference, entertainment & leisure, games, health & fitness, hobbies & interests, life family issues, money & finance, movies & television, music & radio, non-profit & resource organizations, personal homepages, pets home & garden, science & technology, shopping & services, society & issues, sports, and travel. Stated rates are from $14 to $16 CPM.
These are lower rates: however, purchase over $2,000, and you may be able to negotiate a CPM below their rate card. It may look like CPM rates are fixed -- and they are if you use their automated purchasing system. If you're a willing buyer, however, and they have unsold inventory (You can be sure that LinkExchange has plenty of inventory!) -- and you negotiate carefully with a real person, you can probably get a better rate.
Suggestion: Do some testing with a small purchase of 1,000 to 5,000 impressions and see what kind of click-through rate you get. Only then negotiate to make larger buys.
You might also want to check out AdAuction.com (http://www.adauction.com/) that auctions off last minute inventory to the highest bidder. You may find some bargains here, especially if you are purchasing a large enough number of impressions at a time.
Need a banner made? See our sidebar onMade-to-Order Banners (http://www.wilsonweb.com/wmt4/981101banner-prod.htm).
3. Newsletter Advertising
Businesses are finding that some of the best click-through rates are not from banners, but from ads in targeted e-mail newsletters (such as Web Marketing Today, http://www.wilsonweb.com/wmt/). Here you're getting an ad in the context of interesting material, and people will often read your ad as they are scrolling down through the issue. The newer e-mail programs show URLs as clickable hyperlinks, so readers can go directly to your site by just clicking on the URL in the newsletter.
Find the free ezines that are serving people who would make your best customers and subscribe to them. After you get an idea of the flavor of each, look into prices for advertising in or sponsoring an issue. While some charge rates based on CPM (such as our newsletters), others have flat rates for ads. You'll have to do some searching for the right newsletters, but this could be an especially rewarding strategy that won't break your budget.
4. Keyword Purchase
Connecting with the people who are actually searching for your product or service is the most ideal situation. You're probably aware that you can purchase keywords on the major search engines and directories. For example, when someone enters the search phrase "mountain bikes" your colorful animated banner pops up above all the search responses and takes advantage of people's demonstrated interest. Often they'll click on your banner and not even go to the search results below.
This kind of advertising is sold on a CPM basis. Since it is quite targeted, the cost is higher than more general advertising. LinkExchange Express, for example, allows you to purchase advertising on Yahoo! for between $100 and $2,000 at a time (http://www.le-express.com/yahoo/). At this writing the cost is $20 CPM for targeted banners related to keywords, and $10 CPM for run of site banners on Yahoo.
A great bargain for smaller companies can be found at GoTo.com (http://www.goto.com). Here's a search engine where the top spots are paid for by advertisers such as yourself. After the paid ads, the search results from an Inktomi-powered search engine are displayed. When I search on "cats" for example, the first entry was for "VHS Videos Designed for Cats to Watch." Now there's a thought. At the end of the entry was the phrase: Cost to advertiser: $0.09. That means that every time a cat-lover clicks on the link -- Ka-ching! -- the advertiser pays 9 cents. "Cats" must not be too competitive a keyword just yet.
When I put in "Web marketing" however, ouch! the top ranked spot was paying 32 cents per click. But my "ouch" must be modified considerably. While the Web marketing firms are paying 3 times what cat video firms are paying, 32 cents per click is substantially less than the $3.50 we calculated per visitor using banner ads at an average $35 CPM. Nor do you need to grab top spot to get some click-throughs. Fourth position in the "Web marketing" list was down to 14 cents per click, giving you quite adequate visibility.
But expect rates to go up as your competitor covets the position just above you. When you think of it, this is a great business model. GoTo.com inspires advertisers to outbid each other and GoTo's revenue only climbs. One of my desired keywords rose from 30 cents to 36 cents within a week's time.
Advertisers can purchase several keywords or phrases at a time, using whatever title and description they want for each. Titles can be up to 40 characters, with the description up to 190 characters. If you wonder how many clicks you are likely to get on a keyword, you can see last month's total for a word and related phrases. For example, the search word "web marketing" was entered 81 times in September, so if I had purchased first spot (assuming it stayed at 32 cents for the whole month), my total for that phrase would have been $25.92 (assuming everyone who saw the link clicked on it). While GoTo.com doesn't get near the traffic of a Lycos or Yahoo, you are only paying for actual visits to your site, and -- I'm sure GoTo.com won't mind me saying so -- you won't break the bank to bid for the number one spot. "Marketing" got 1,423 searches in September, and currently the top site is paying 32 cents. On the other hand "cats" had 5,293 searches in September, Egyptian cats 176, Persian cats 117. You get the picture. Meow!
5. Pay Per Click or Pay Per Action
This brings us directly to the Pay Per Click (PPC) or Pay Per Action (PPA) models.
Some sites will take advertising on a Pay Per Click basis (though we won't, since the click-through rate varies a great deal based on the quality and targeted-ness of the banner ad). Ask about it when you find a site you like. Many sites have unsold inventory and are willing to consider any reasonable offer.
ValueClick (http://www.valueclick.com), "the pay for results advertising network," is made up of 6,000 member sites. You can purchase advertising with ValueClick on a quite reasonable pay-per-click basis; the minimum purchase is $2,000. Sites are grouped within 14 different categories, such as computers & technology, entertainment & media, shopping, travel, sports and recreation, and health.
While pay per click is pretty obvious, you can also set up arrangements to pay only when someone fills out your form or purchases a product, i.e. performs an "Action." Irv Brechner of the Transact! Network (http://smartbiz.com/sbs/transact.htm) offers this kind of service.
A closely related model is to develop an affiliate network. An affiliate puts a link or banner on their site, and are paid when a shopper from their site makes a purchase at the store. While this model is extremely attractive, and has been showcased expertly by Amazon.com, this kind of program is very difficult to administer well. Unless you can invest considerable time in setting up and running an affiliate program, don't bother to start. (More information can be found in the Affiliate Programs section our Web Commerce Today Research Room, http://www.wilsonweb.com/research/associate.htm)
There is however an another approach. For a fee, ClickTrade (http://clicktrade.linkexchange.com/mpricing.htm) will administer a program for you, taking 30% (on top of the payment to the affiliate) for their trouble. For example, you can set up an affiliate program that pays affiliates 25 cents per click-through from a link on their site to yours. The minimum deposit to set this up is $100. Sure, it costs money, perhaps 32.5 cents per click (25 cents, plus ClickTrade's 30% commission or administration fee), but for the small business, having ClickTrade take care of administering the program will be well worth it. ClickTrade also offers pay-per-lead and pay-per-sale programs.
6. Search Engine Positioning
The final approach you should consider is paying for a company to do search engine positioning for you. We wrote about this last month (http://www.wilsonweb.com/wmt3/issue49.htm), and will focus on it again in the near future, so we won't spend much time on it now. But at the going rate, you can get a shopper in your store for 25 cents a head, when they click on a top ranked search engine link set up by the position company. Your customers are qualified by having seen your link, read your site description, and choosing to click on your site, so they're pretty well targeted. (We can suggest some trustworthy, competent positioning firms.) Sure, you can do search engine positioning yourself, but the time you'll spend in the process will be exorbitant (trust me, I know). This is one you'll probably want to outsource. For do-it-yourselfers, however, I strongly recommend WebPosition so you can track where you are in the search engines as you inch your way to the top.
Now you can probably think of other low-cost, budget-friendly advertising approaches in addition to these, but I have a feeling that these will keep you busy for a while. Happy marketing!
If you have some slim-budget ideas that work for your company, please contact me, and I'll pass some of them on to readers in a future issue.
Read additional articles from Web Marketing Today, Issue 50, November 1, 1998
