Rogue Thoughts

If you figured that the internet is probably here to stay, and that, although what you offer this internet, is of supreme quality, you DO have to advertise it..there… on the… internet. Here is a quick guide to how to get the best of it.

There are several different ways to do online advertising. But first it is important to keep one single thing in mind: When you want to communicate something it is always important to realize what the recipient finds relevant. Relevance is the ‘demand’ of internet advertising, and guess what…on this..internet it is a buyers market.

Today there are three payment models in use. Let us take a look at these, to find out which one suits you best
CPM – Cost Per Mille: The advertisers pay per thousand expositions. Typically used by newspapers, radio and television. For this to be effective the advertising company must make sure that the segment of users (newspaper readers for example), matches the intended target segment. A hit-list pop station may be good for soft drink adds while the jazz station may be better suited for bourbon. The relevance thus depends on how well the target segment fits the actual recipient segment AND how well there is an actual fit between the stipulated relevance of the add for the target segment.
Pros: Advertisers know exactly how many he will pay for
Could be cheaper per exposure than the alternatives
The model is intuitive
It is more diffuse
Cons: Low correlation with sales
Lower probability that it will actually be relevant for the individual recipient
When/when not to use: When you have a wide segment or want to control the context in which your brand appears. If you have a small donut shop and want to move in to the snobbier abodes of the pastry market an add in Gourmet Magazine. You wold probably not want to use this model if you are running a campaign for your new size 1/8 drill for hardened steel

CPC – Cost per click: the advertiser pays per click, this is perhaps the most common model. It is used by Google’s AdWords, but yahoo and Microsoft also offer the service. CPC billing is found in two forms, the original one was the “Flat-rate model”, where every click is billed with the same price. Then google invented the “Bid model”. A good overview can be found in this article. The bid model essentially bills the advertiser according to a bid on search key words. This is currently the most widely used. The relevance depends on how well the “Key word” matches the content of the Add.
Pros: It is targeted according to the action of a user, ie. he/she has typed a word stating intention.
Cons: It is susceptible to fraud, because of false clicks
It is not very intuitive (the bid model)
it is difficult to figure out when, where, why and how many times it will be featured
When/when not to use: When you have a very well defined product that easily translates product offering into search phrases. If you have niche offerings, the further out the long tail they are the more effective the CPC model will be. So if you specialize in pink bicycle apparel, you know what to do. If you are at all concerned about effectiveness and would not want your new line of farmers-market-type-dairy products ending up in any search for jugs, you may want to choose something else.

CPA cost per action: The advertiser pays for every time an add results in some action, like buying a product. An example of this is a company called jellyfish, which was acquired by Microsoft October 2007. It is now part of Bing known as cashback. They only charge when the customer actually makes a purchase, or some other agreed upon action.
Pros: Very transparent and intuitive for the advertiser
No possibility for fraud.
Cons: Difficult to use if you are not an online merchant, or cannot sell your product immediately (like for example an insurance policy or a bank loan)
When/when not to use: When you have a very well defined objective, like signing up members for a political party like, say, “The Official Monster Raving Loony Party”. It may not be of much use if one day you find yourself the Chief of Tourism in Butan.