September 2001 Newsletter

Two Questions Before Advertising on the Internet

*****Quick Picks

Click Z
Advertising Works, But It is Not a Magic Bullet
"The trick is to get your product into the prospect's consideration frame. You want prospects to consider your product as a possible choice if and when they're thinking about the product category."

[link no longer valid]
Marketing Dollars and Diminishing Returns
" (and as hard as it may be to believe), everyone has a limited marketing budget and has to use it responsibly, particularly in today's market."

[link no longer valid]
Marketing Plan Optimization Starts With a Solid Strategy - while this is related to email programs the process for advertising is the same.

*****The 4specs Perspective

Advertising on the Internet

Internet advertising is closest to direct mail - send out the mailing and measure the results. Evaluate the costs and compare to the potential revenues and profits.

At least ten times at the Dallas CSI Convention in June 2001 I was asked about how to evaluate Internet advertising offers. In my opinion there are only 2 questions that need to be answered:

How many people are you going to send to our website?
How much will it cost us per person?

Every advertising offer (Internet or not) should be, and can be, resolved to these two questions. Let me first state my assumptions regarding the Internet over the next 5 years. I have chosen 5 years as a transition time to both architects and manufacturers to fully realize the Internet potential.

Product binders are expensive for the manufacturer to maintain. Product binders are also expensive for the architect to maintain. Product binders are going to disappear or substantially shrink to become a guide for the Internet site. In my opinion, CD-ROMs have already failed as a viable information distribution system.
Finish materials - carpeting, vinyl wall coverings, material finishes - will need samples in the architects library and will probably have a supporting binder. These are an exception to #1.
Architects want access to every manufacturers' website, not just those advertising on that website. That is why 4specs hot links to over 10,000 manufacturers, most of them for free. From the users' perspective, the free ones are more valuable than most of the paid ones! Typically it is more difficult to locate free Internet addresses as they are not well publicized. The Andersen Windows and Sloan Valve websites are easy to find. Vandal Proof Phone's website is more difficult to know that the product exists and is difficult to find.
Your website is (or should be) the best place to find and use your design data. There is no reason to host individual data sheets on other websites. These additional data sheets will require maintenance over time and may be difficult or expensive to get modified as you drop products, change specifications or add new products. Have the other websites point to your website. You may want different entry pages for different advertising media or ad programs to provide additional information directed to the ad or website offer.
Be willing to pay for qualified users delivered to your website. We think that a $1 to $5 cost per person is fair. (4specs will guarantee traffic to your website for under $1. Some manufacturers receive referrals from 4specs at under 20 cents per referral, as 4specs has flat price per section per year with no cap on referrals. In addition, 4specs reduces advertising costs for manufacturers with specialty products in specialty sections where few people go to look. Some pages just do not have many visitors - this is similar to the Yellow Pages where more people look for pizza and Chinese food than locksmiths. Our goal is to keep your costs under $1 per referral.
Use banners for special promotions and new product introductions. Expect to pay $5 to $10 per referral on a banner.

Let's look at some of the advertising offers I have heard about for construction products.

Offer 1 - "We will run your banners for $7000."
1. Internet banners as run by Engage and other advertising publishers typically cost $20-50 CPM for construction-targeted campaigns. CPM means cost per 1,000 impressions. This publisher has not defined the number of times the banner will run. To achieve a cost of $35 CPM, they would have to run the banner 200,000 times. (It would take this specific website about 3 months to show that number of banners if your banner were run on an exclusive basis.) Offers of banner exposure time cannot be evaluated unless you know the number of times the website will show their banners in that time frame. Ask the publisher "How many times will you run our banner for $7,000?" Do not accept bottom of page banners as equivalent as they have an even lower click-through rate.

2. Ask the publisher "What is your typical click-through ratio?" The publisher should have a track record of click-throughs for other advertisers. If you run the banner 200,000 times, and have a 1% click-through, you will receive 2,000 referrals to your website. At a 1% click-through ratio, and a $35 CPM, you will have paid $7,000 and each click-through will cost $3.50. More typical click-through rates are 0.2-0.5%. At 0.2%, each click-through will cost $17.50; at 0.5% the cost would be $7 per click-through.

3. Ask the publisher "Will you provide a short run (say 5,000 banner exposures) for free (or $200 for a trial) to provide a way to evaluate the performance of your website for our banners?" You will need to develop a message and a banner for the trial. Standard banners are 468 pixels wide x 60 high.

4. Decide upon an acceptable value for each referral to your website and your advertising decisions will be easy.

Offer 2 - "Participate in our virtual trade show for $2,500."

Offer 3 - "We have over 150,000 visitors per month. A listing in our directory is only $2,000 per year."
The questions for both offer 2 and 3 is how many visitors enter into the virtual trade show each month (as compared to the website in total) and how many times do the visitors click-through to manufacturers. The math is similar to above. How many people can I expect to visit my website and what is the cost per person?

Offer 4 - "Our Power Page for only $6,000" or $2,500.
Why not use the concept of a power page on your own website? Why pay for what you can do yourself? In my opinion most websites have too "pretty" a design and are not focused on delivering design information to the construction professional. The WebFormat concept has been published by the Construction Sciences Research Foundation, is free and can be adopted by your web designers:

Offer 5 - "Only 20 cents per view" (This was Construction-Zone and they are no longer in business)
1. This website has the manufacturer develop special data sheets in their proprietary format.

2. Their primary reporting is on "views" and most people assume this means that the user saw their complete data sheet. The website actually counts the number of times an advertiser's 1" high mini-ad was viewed, not the number of times the complete data sheet was seen. Their concept of a "view" is closer to an impression (part of the CPM cost) rather than the 4specs concept of a click-through. At 20 cents per view, the CPM is $200! Expensive; 6 times standard advertising rates.

3. The questions here are again - "How many times did a user view our complete datasheet and how many people did you send to our website?" Divide the sum of those numbers into your cost to get the cost per referral.

We have designed 4specs to provide the best bang for your advertising money. Contact us with any questions you have.

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Colin Gilboy
Publisher - 4specs
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