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					High ROI from Online
   Media Buying
                                  Introduction:


                         Mediums of Online Advertising




The traditional world of online advertising has changed dramatically and continues
to present new opportunities to direct response marketers on a yearly basis. In
order for a direct marketer to make the most of his advertising budget and increase
his potential for profit dramatically, it is critical that he has a solid grasp on the
many options available to him when purchasing online advertising.

The most popular mediums of online advertising for the purpose of media buying
today include individual websites, social networking websites, forums, newsletters,
and especially ad networks. While years ago a seasoned direct response marketer
may have relied primarily on conversions through television, radio, or print
advertising, the Internet is quickly surpassing these advertising channels in both
reach and convenience.



                  By using the above channels of online advertising, a
                  direct marketer can run cheaper ad campaigns and
                  generate a higher ROI to yield more profit potential
                                   than ever before.



While many direct marketers investing in online advertising start out small by
making direct buys through individual websites, small forums, or newsletter banner
advertisements, the real money to be had is in scaling a campaign to the ad
networks. In order for a media buy to be truly successful and worth the advertising
dollars spent, each campaign must be taken to a larger ad network or other high-
volume traffic portal for the maximum ROI.



                                                                                         1
Scaling a campaign to this high level for greater profitability is exactly what this
report will cover. But first, it is important to examine the statistics and data that
have shaped the modern world of media buying and online advertising.




                           Direct Marketing Statistics




In order for direct marketer to be successful in managing multiple campaigns on
larger ad networks, he needs to become familiar with the traffic potential available
in a number of high-volume traffic portals. Based on a W3Techs survey, Google
Adsense is currently the most popular ad network cornering the market in its use
by 17.7% of all websites surveyed1.

Yet other popular ad networks are still commonly frequented by smaller
percentages of webmasters, such as DoubleClick at 6.6%, OpenX at 4.3%,
Commission Junction at 3.8%, Infolinks at 3.5%, Yahoo Advertising at 2.2%, and
AdBrite at 1.9%.




                                                                                        2
In light of these statistics, how is a direct marketer expected to affordably manage
a number of ad network campaigns to successfully profit from his media buys?
Fortunately, online advertising makes the process of media buying not only
convenient but efficient and cost-effective at the same time. It all starts with using
the right technology.

Technology can be utilized to automate the media buying process, cutting down on
the time and costs involved. This gives direct marketers more time to split test,
strategize, and fine tune their existing campaigns for a higher ROI.




                     While most direct marketers are familiar with
                 automation on the Internet, it is surprising to find that
                           few are embracing this transition.



These direct marketers may not realize that using automation in the media buying
process can shave off extraneous advertising costs in the preparation of a campaign
in the same way that it will minimize costs in the management of each campaign.

In essence, automation in media buying promotes trimming the fat. Cutting away
any superfluous interactions that could waste precious time and valuable resources
for a direct marketer. Burrell Communications is one such company that advocates
automated media buying for all direct marketers2. In 2010, they began testing an
automated online media buying tool called Transis created by Centro, designed to
be used by larger corporations like Procter & Gamble, American Airlines, and
General Mills.

This tool is able to organize ad campaigns for larger agencies and independent
direct marketers alike. It virtually eliminates the need for manual media buying and
negotiations via e-mail, fax, or the telephone. The goal of this automated media
buying tool is to reduce the amount of menial tasks performed by direct marketers
so that more time can be spent focusing on the ROI of each campaign.



                                                                                         3
It’s not surprising that an automation tool like this could yield impressive results in
increased productivity, ranging anywhere from a 31% to 65% increase. Centro
further confirms that 85% of media buyers surveyed would prefer to spend more of
their time on strategic planning instead of managing their campaigns2.

The results of the survey are depicted in the infographic below:




Technology continues to impact the world of media buying even more significantly
when it comes to social media and the search engines. Newer techniques in online
advertising combine metrics from both the search engines and social media
marketing. These modern metrics help a direct marketer to better determine the
profitability of media buys for their campaigns by using innovative tools produced
by companies like Search Ignite3.

Search Ignite provides platforms for digital media and search engine optimization.
Their tools are now equipped with the ability for a direct marketer to access both
social and search data through one dashboard. These social and search metrics
directly relate to the success of a marketer’s ad campaign. It is imperative that a
direct marketer can track and analyze how their demographic interacts in both the

                                                                                          4
search and social communities of the Internet to determine the overall effectiveness
of their ad campaigns on any given ad network.

Before a media buy is made, a direct marketer must gather how customer
behavior is influenced by both search and social channels. If this data is
handled incorrectly, it could cause a negative ROI on a highly expensive campaign
for an advertiser.

The Audience Management Platform is another social and search data tool released
by Involver that allows a direct marketer to manage their campaign strategy
throughout the social web3. The dashboard of this tool will present a direct
marketer with both search and social data side-by-side within the same interface
for their review.


                                               It used to be that if you wanted
                                               sophisticated marketing tools, you had
                                               to be rich. That’s not the case on the
                                               Internet. Anyone can compete, just at
                                               different levels.

                                                   Chris Baggott, Compendium
                                                            Blogware




The data gathered is of the utmost significance to a direct marketer because it
reveals both demographics and customer behavior in response to a particular ad
campaign. This social and search data becomes even more critical when testing an
ad campaign to generate a high ROI since it will give a marketer a direct look into
the behavior patterns, tendencies, and emotional needs of their demographic.

Clearly, technology puts online advertisers at a distinct advantage over the
traditional practices of offline direct marketers. Similarly, the future of online
display advertising is only expected to grow. Online display advertising currently
makes up $7.8 billion or 30.4% of all Internet ad spending.



                                                                                        5
This number is expected to more than double to $16.9 billion in 2014, which should
still yield roughly 30% of all online advertising spending, according to Forrester
Research statistics4.

While many experts have speculated that online display advertising will fall by the
wayside to the popularity of search engine marketing, direct marketers continue to
forge ahead for two very specific reasons. Firstly, online display advertising yields a
profitable ROI that is easy to track for each campaign. Secondly, display advertising
can be done through a wide variety of high-traffic media channels to generate
lucrative results.




           Effective Negotiation with Ad Networks and Portals




A media buy begins with successful negotiation with an ad network in order to
secure an affordable deal with the highest traffic potential. Ad networks can range
in size from managing a small network of websites to controlling a database of
thousands of websites within one system.

After negotiating a contract with an ad work, an ad campaign will be displayed on
all of the websites within a network to a variety of media channels frequented by
highly targeted traffic. The negotiation process is critical. It will ensure that an ad
campaign displays to the right demographic and traffic volume in order to generate
a higher ROI.

A direct marketer will normally negotiate with an ad network via a representative.
Within the negotiation, several key principles will be covered to ensure that a fair
agreement is reached. These principles include negotiating based on various pricing
structures for each ad campaign, such as CPM, dCPM, and CPA.

CPM is a payment model most often used with direct media buys on smaller
websites or forums; a marketer will pay for each 1000 impressions within their ad
campaign. dCPM is slightly different in that it tracks the dynamic CPM of a


                                                                                          6
campaign, meaning that an ad network can adjust the payout based on the
performance of a particular ad campaign. Lastly, CPA will allow a marketer to only
pay for their conversions, offering the lowest risk in a media buy agreement.



                 Most marketers choose to focus on CPA as the prime
                          metric within their campaigns.



CPA will dictate how much an advertiser spends in order to generate a single
customer conversion. If a direct marketer hopes to generate a 100% ROI on any
given campaign, then they must negotiate a fair CPA agreement and continue to
track their CPA so that it ultimately yields half of the total cost of the product
advertised.

Within such negotiations, a direct marketer must focus on bringing their CPA to
profitability in order to generate high ROI from a campaign.

The success of each campaign within an ad network can be effectively tracked using
the pixel provided by a particular network. This makes it imperative for any ad
network to offer a direct marketer their unique pixel tracking so that a campaign
can be tested, analyzed, and modified to generate the highest ROI possible.




              Constant Split Testing Yields Campaign Success




One of the most precious resources for a direct marketer is the ability to split test a
campaign continually. A direct marketer must commit to split testing every variable
within their ad campaign in order to see long-term profitability.

Within any given campaign, a direct marketer can split test a number of
diverse variables. This constant attention to detail through split testing is critical
since one tiny detail could make or break an entire ad campaign. Different landing


                                                                                         7
pages, banners, banner sizes, text, fonts, colors, images, and traffic sources can all
be split tested to determine the most successful components in a campaign that will
yield a high ROI.


                                                     I think it comes back to Marketing
                                                     101. Who is your target audience?
                                                     How are you trying to influence
                                                     them?

                                                           Kevin Lee, Didit.com




Constant split testing is the number one ally of a successful direct marketer to
generate positive ROI. Fortunately, quick, convenient split testing can be done
online through the many tracking tools mentioned above, as well as through the
management of a campaign in an ad server.

Depending upon the age of a particular campaign, a direct marketer may choose
either wide or narrow split testing. Wide testing is often beneficial for a new ad
campaign since it will test drastically different variations in banners, landing pages,
and ad copy. A direct marketer can then progress to narrow testing as a campaign
matures to test small variations in a campaign once it has become profitable. This
tactic will work to continually improve ROI over the long-term.



                The unfortunate truth is that neglecting to split test can
                 potentially cost direct marketers millions of dollars.



For the many online advertisers that purchase large media buys and rely upon their
gut intuition as opposed to statistical data, it could result in a serious loss in the
overall profit of a campaign.

In the A/B Split Testing Research Brief recently published by
MarketingExperiments.com, it confirms that many of the top direct marketers


                                                                                          8
worldwide only rely upon their instincts. Yet these instincts are often incorrect.
MarketingExperiments.com reveals that direct marketers who do not use A/B split
testing lose money every time that they make a new media buy. Some larger
companies lose into the millions of dollars simply because they choose not to test
their new ad campaigns based on diverse variables5.

A/B split testing can determine the overall effectiveness of an ad campaign by
focusing on two different variables within the same advertising message or product
promotion. This split testing will determine which campaign is the most successful
based upon click through rates, increased conversions, and overall ROI.

In order to perform A/B split testing correctly, the traffic for each campaign will be
divided evenly. Consumer behavior and conversions will then be analyzed to
determine which version of the campaign is most profitable. This style of testing
must be performed continually throughout the life of a campaign in order to
improve ROI and reduce the risk of a serious financial loss.




           Helpful Guidelines When Working with Ad Networks




In order for a direct marketer to see the greatest success when running an ad
campaign, they must choose the ad networks that they work with wisely. It all
begins with simple market research.

A direct marketer can begin by assessing an ad network’s largest advertisers and
gauging what type of traffic that they are buying. Any reputable ad network
representative will be happy to provide a direct marketer with such case studies
and statistics.

Furthermore, it is essential that a direct marketer takes the initiative to
communicate with their account manager or representative as often as possible via
e-mail or the telephone. All such communications and negotiations must be



                                                                                         9
carefully recorded and placed within the Insertion Order once an agreement is
reached.

A direct marketer can make a wise selection in choosing an ad network by asking
various questions about frequency caps (the amount of times within a specific time
period that an ad will be displayed to each unique visitor), defaults (when house
advertisements are displayed to traffic sources), if an ad network monetizes on
traffic outside of the US, if CPMs are guaranteed, and if an ad network has new
initiatives or formats (such as beta testing) to benefit the success of a campaign.



                                              Interactive and digital technology
                                              doesn’t necessarily do a lot of things
                                              new, but it does all things better,
                                              faster, more cost efficiently.

                                               Patrick Duparcq, Kellogg School of
                                                         Management




                    The Importance of Insertion Orders




Insertion Orders are a pivotal staple of any successful agreement between a direct
marketer and an ad network. An Insertion Order, also called an IO, is a contract
that will protect both the direct marketer and the ad network in a media buy
transaction.

An IO will include such information as the CPM rate, demographic targeted,
countries targeted, out clause, frequency, even delivery, and even terms for billing
off an ad server to ensure consistency in the execution of a media buy.

The IO will serve as a legal document that represents all verbal and e-mail
communication between a direct marketer and an ad representative. The
agreement must be printed, signed, and faxed before a media buy is to take place.


                                                                                       10
               Perhaps the most important component of an Insertion
                   Order for a direct marketer is the Out Clause.



A standard IO may contain a 24 to 72 hour out clause, which dictates that if a
direct marketer were to pause their campaign at any time, the ads must be paused
within the amount of hours agreed upon.

If an IO has a 24-hour Out Clause, as an example, then all ads in a campaign must
be paused within 24 hours after an advertiser has requested this action. This Out
Clause protects the direct marketer and prevents an ad network from abusing a
marketer’s advertising budget after they have requested for their campaign to be
paused.




                   The Role of Ad Servers in Media Buys




After a media buy has been negotiated, a direct marketer will rely primarily upon
an ad server to manage banners within multiple campaigns displayed on a number
of websites. An ad server serves display advertisements on behalf of an advertising
network. It is the common link between a direct marketer and the websites that
their campaign is advertised upon.

While many direct marketers may believe that an ad server is optional or not worth
the investment, it is difficult to manage a campaign successfully without the use of
this valuable tool. In short, an ad server is vital to manage multiple campaigns
within an ad network, as well as to track and report campaign statistics.

This will allow an advertiser to target their ad campaign even more effectively to
the right demographic through the split testing and tracking process described
above.



                                                                                     11
As an example, if an advertiser is targeting their campaign to a specific
demographic after purchasing top inventory, he can specify within the ad server
which age group and demographic that the campaign should be targeted to.

The ad server will then only display the ad campaign to this narrow demographic;
display advertisements will not be visible to other traffic sources outside of this
select group.

Based on this targeted approach, an ad server will provide clear data for an
advertiser to help him further modify each campaign more effectively to his
demographic. Additionally, an ad network will often conveniently bill an advertiser
off of their ad server if this information is included in the Insertion Order.

When an advertiser is billed directly off of their ad server, it will offer him further
insight and control in order to successfully manage the budget of his campaign.
Since the ad server will track the exact cost of a campaign to the letter, a marketer
will not experience any unpleasant surprises when being billed by an ad network for
their campaign cycle.

                                                      Human nature has a tendency to
                                                      admire complexity but reward
                                                      simplicity.

                                                        Ben Huh, CEO, Cheezburger
                                                                 Network




                        Online versus Offline Media Buys




For the many direct marketers transitioning from the world of offline to online
media buys or hoping to find balance between the two, it is important to
understand the advantages of both advertising methods.

While offline advertising has an exceptionally large scalability and the potential to
generate a positive ROI if conducted correctly, this traditional advertising medium


                                                                                          12
is normally much more expensive. With the many conveniences and advancements
available in advertising on the Internet today, online media buying can offer an
advertiser immediate conversions within a much more cost-effective media buying
strategy.

Additionally, for the same advertising dollars spent on a billboard or television
commercial, a direct marketer can invest that money into online media buys to
reach an even wider audience at a national or global level, depending upon the
traffic source that they target.


               What is even more intriguing is that offline advertising
                today now drives those same customers online to
                purchase or connect with brands via the Internet.


Although customers still respond to advertisements on television, in print, and on
the radio, these offline advertisements encourage shoppers to visit an advertiser’s
official website from either their mobile phone or their computer, according to a
2008 survey conducted by Jupiter Research6.

66% of the customers that responded to an offline ad visited a company’s website
or searched for the brand online to find out more compared to the mere 14% that
called a phone number listed on an advertisement. 70% of customers visited a
website in response to a television advertisement.

These results are pivotal for direct marketers to understand how offline
advertising spend can translate into online media results. In most cases,
offline advertising dollars are used to direct customers to an online advertising
campaign as a part of a broader marketing strategy.

Television and print advertisements are the most likely forms of advertising to
encourage customers to turn to the Internet at 70% and 57% respectively. This is
made all the more possible through mobile Internet technologies since 66% of
customers conducted an Internet search on their mobile phones after seeing a



                                                                                      13
magazine or newspaper print advertisement. Additionally, 82% of Internet searches
inspired by offline advertisements were done on home computers.

Clearly, offline advertising is used primarily today to drive customers to the
Internet. Successful offline advertisements can feed directly into an already
profitable online advertising campaign to generate an even higher ROI.




        The Purpose of Remnant Traffic in a Media Buy Campaign




Remnant traffic is the unused inventory of an ad network that can often be
purchased much less expensively than premium traffic on a high-volume traffic
portal. This remnant traffic can provide an advantage to a direct marketer in that it
can be used to effectively test an ad campaign while minimizing the risk of financial
loss.


                  The majority of an ad network’s inventory will often
                 become remnant since it is not possible for a publisher
                        to sell 100% of their traffic every time.



This will allow a direct marketer to take advantage of this remnant inventory in
order to test how a new traffic source will convert at a lower cost than paying for
full price display advertising.

This type of remnant testing can be used on a network by network basis in order to
help a marketer make a more educated decision to guide their campaign. When
using a new ad network, a direct marketer can test their remnant inventory quickly
and inexpensively to see how well the traffic on a certain channel will convert.

However, there are disadvantages to the use of remnant traffic that a direct
marketer must keep in mind. Since remnant traffic is unused and left over from
premium traffic sources that have already been purchased by other advertisers, it


                                                                                      14
may limit a marketer’s exposure and taint their demographic. Meaning, if the prime
traffic of an advertising channel has already been sold to other advertisers, then
remnant inventory may not cater to a marketer’s desired demographic. While this
case is rare, it is still a valid disadvantage for a direct marketer to consider.




    Using a Media Buying Company versus Working Independently




In many cases, a marketer can minimize their risk greatly and increase their profit
by relying on the experience of a third-party to build their campaign. By using a
trustworthy media buying company, a direct marketer can receive access to the
best display placements and better negotiate a fair and profitable price on each
individual advertising campaign.

The use of a media buying company as opposed to working independently as an
advertiser can help a marketer to track the results of their campaign even more
effectively. If a direct marketer is new to media buying or unsure of how to manage
different metrics within their campaign, they can rely upon the guidance or tools
provided by a media buying company to better split test and track the results of
their media buys.

This type of feedback and analysis can make a mediocre campaign even more
successful to generate a positive ROI.




          Approaching Large Ad Networks with a Small Budget




Although a marketer’s advertising dollars can go much farther online versus offline,
it may be difficult for an advertiser on a small budget to approach large ad
networks in the first place. These high-volume traffic portals often deal exclusively
with well-known brands and may choose not to negotiate with a marketer executing

                                                                                     15
a small campaign on a tight budget. This is yet one more advantage as to why an
independent marketer can work well with a media buying company to negotiate
with large networks on their behalf.

In order for a direct marketer to avoid this issue altogether and receive impartial
treatment, it is critical that they contact an ad network directly and specify their
budget upfront. A direct marketer can also request to perform an ad campaign test
as quickly as possible in order to show an ad network that they are serious about
their negotiation. Additionally, it is beneficial for an advertiser to confirm that they
have already tested the landing pages and banners within their campaign and are
ready to begin advertising immediately.


                   A direct marketer can further build their reputation
                  with smaller ad networks first in order to reach out to
                           large ad networks more successfully.


This can be done by prepaying with 1 to 2 small ad networks for a period of time
until a marketer has built up a solid payment history. From there, the marketer can
ask to increase their credit line and use these smaller ad networks as references in
order to leverage an ad campaign with a large media channel.

Although it may be difficult for a smaller advertiser to contact a large ad network
initially, a successful agreement can be achieved with the proper negotiation and
with the use of a media buying company working on their behalf.




          The Art and Science of Managing Traffic Conversions




Once a direct marketer has a solid campaign running on the ad network of their
choice, it’s time for the advertiser to focus on managing their traffic conversions in
order to increase their ROI as much as possible.



                                                                                       16
After making several conversions, a marketer can begin to adjust the
weights in their campaign within their ad server. This will enable a campaign
to display to the most profitable demographic the majority of the time to generate
an even higher ROI.


                   Truly, the work of a direct marketer is never done.



A marketer must commit to continually testing and tracking by split testing an ad
campaign for as long as it runs on a network. An advertiser can continue to focus
upon their steady traffic sources by presenting them with the right offer, which will
guarantee a solid return in conversions.

Once an advertiser has access to a steady source of traffic within a targeted
demographic, they only have to give their customers what they are looking for in
order to see a great increase in conversions and a high ROI on a campaign.

In order to minimize the financial risk of scaling a campaign on a large network, a
marketer can begin testing and tracking their campaign on smaller networks until
they have achieved a satisfactory conversion rate and a solid ROI.

At that point, it is time to then scale the campaign to the larger ad networks over
the long term. Once a campaign is already successful in generating results on
smaller networks, it can be used to produce serious profit when displayed on large
media channels online.




                                           This is not your father’s marketing.
                                           Instead of “do it right no matter
                                           what”, search marketing demands
                                           that you “do it wrong quickly and
                                           then fix it”.

                                                     Mike Moran, IBM




                                                                                      17
             How to Get the Best ROI from Online Media Buys




Based on the information in this report, it’s clear that a direct marketer can be
profitable in the realm of online advertising when a campaign is approached
correctly. However, the most important bottom line in a successful display
campaign is generating a high ROI, which yields a serious profit for the advertiser.

A direct marketer can ensure their long-term success by researching the ad
networks that they advertise on, split testing each campaign on a continual basis,
scaling to a larger ad network once a campaign is successful, and using a media
buying company to negotiate the best prices on their behalf.

In truth, media buying is not about branding since a marketer will promote a
number of offers in their campaigns. A successful media buy hinges upon
experience in direct response advertising that is honed by years of practice and
skill.



                Top direct marketers have learned by now that in order
                   to see a great return, a great risk must be taken.



Even if a marketer begins a campaign on a small advertising budget, they can still
perform wide split testing until they narrow down exactly which variables are
causing a campaign to perform most successfully.

Once these variables have been highly targeted, a small but successful campaign
can be scaled to high-volume traffic portals in order to generate a high ROI for the
long-term.




                                                                                     18
Sources:

  1. "Usage Statistics and Market Share of Advertising Networks for Websites." W3Techs
     - World Wide Web Technology Surveys. Web. 08 June 2011.
     <http://w3techs.com/technologies/overview/advertising/all>.
  2. Sullivan, Laurie. "MediaPost Publications - Home of MediaDailyNews, MEDIA and
     OMMA Magazines." MediaPost - News and Directories for Media, Marketing and
     Online Advertising Professionals. 4 Oct. 2010. Web. 08 June 2011.
     <http://www.mediapost.com/publications/?fa=Articles.showArticle>.
  3. Sullivan, Laurie. "MediaPost Publications - Home of MediaDailyNews, MEDIA and
     OMMA Magazines." MediaPost - News and Directories for Media, Marketing and
     Online Advertising Professionals. 13 July 2010. Web. 08 June 2011.
     <http://www.mediapost.com/publications/?fa=Articles.showArticle>.
  4. Crosett, Kathy. "Online Display Advertising Predicted to Grow." Marketing Forecast
     from Ad-ology. 29 Jan. 2010. Web. 08 June 2011.
     <http://www.marketingforecast.com/archives/4297>.
  5. "Marketers Who Neglect A/B Split Testing Are Losing Millions of Dollars." Be
     Relevant! Email Marketing Blog. 25 Aug. 2005. Web. 08 June 2011.
     <http://www.b2bemailmarketing.com/2005/08/marketers_who_n.html>.
  6. Deatsch, Katie. "Industry Statistics - Offline Ads Inspire Consumers to Go Online to
     Research and Buy - Internet Retailer." Industry Strategies for Online Merchants -
     Internet Retailer. 15 Aug. 2008. Web. 08 June 2011.
     <http://www.internetretailer.com/2008/08/15/offline-ads-inspire-consumers-to-go-
     online-to-research-and-buy>.




                                                                                        19

				
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