Feb

23

CYA: Cover Your Arse. This is at the core of why media buyers love web metrics.

Many years ago I took over the publisher’s reins at a travel trade publication house. All of our publications, monthly and annual, were audited by one of the big third-party circulation audit companies. Audited circulation numbers were and are the gold standard with which advertisers measure the value of print publishing in their campaigns. The better your numbers in a given sector, the more money the publisher can charge advertisers for printed ad space. From the audit results came the numbers we could put on the rate sheets, every single year.

The audits measured the demographics of a given magazine’s circulation, and what percentage asked for a subscription (”controlled circulation”) and what percentage was left to bulk mailing or free-for-pickup (”uncontrolled circulation”). Obviously the controlled portion was worth more to advertisers, as people were asking for the magazine, whether they paid for it not. It also helped to know who it was that was doing the asking. A controlled circulation that had an 85% vertical of people who flew First Class could generate a much higher per-reader advertising rate than a controlled circulation that was made up of budget travellers.

The thing about print publishing though was that was where the direct measuring really ended. After the print ad ran for however many issues, the advertiser would eyeball his sales figures to see if there was a noticeable lift. Advertising strategies were measured in quarters and years. After spending $5 million on print ads over 12 months, if the sales figures slanted up at a steep angle, the campaign was considered by the advertiser to be a success.

It was accepted by the advertiser that this period of “lift” also helped impress their brand on the consumers. Advertising is only effective when noticed, and with our diminishing attention spans for commercial messages, repetition was the key. Advertisers knew they had to keep imprinting their message onto consumer retinas. That took time, again measured in quarters and years. Then along came the Web, and with the Web a way to measure reader response.

Advertisers very suddenly became obsessed with measuring everything. How many clicks did I get? How many people did the clicking? How much did each click ultimately cost me? How many clicks became conversions to sales? What was my Return on Investment after 30 days?

That last question became (and still remains in many cases) the mantra of the advertiser’s media buyer. “I spent $10,000 on an ad campaign on Site X, and generated $2500 in sales. That’s a huge loss. Drop Site X from our future buys.” Rather than accept that perhaps their creative didn’t suit Site X’s audience, or that another five months of advertising would lead to brand buy-in from thousands of new customers, the media buyer will now use the web metrics to Cover Their Backside. They can go to the CEO and say “I yanked that site from our campaign because it was underperforming,” and the media buyer’s job is safe. They’ll be perceived as being protective of the company. Web metrics make that possible.

What a lot of media buyers don’t realize is that just because you can measure something it doesn’t mean that the data is useful. A perfect example is UserFriendly’s longest-running site sponsor, Register4Less. The president of R4L, Doug Friend, saw that there was an excellent match between UF’s audience and R4L’s domain name provision services. Rather than simply run a month-long ad campaign here and there, Doug paid for a front-page vertical-exclusive sponsorship tile. The first year saw moderate returns, and R4L paid more to UF than they earned in sales from UF sources. The second year was quite a bit better. Now in their third year, the R4L crew is seeing a significant lift in brand recognition and customer numbers. This validates the fact that branding through long-term repetition still works when you have a good match between audience and product. It had nothing to do with measuring ROI over a 30-day period.

The difficulty for site owners is in swaying media buyers who either fear for their jobs or are under direct instruction from their CEOs to use short-term metrics. It’s an uphill battle, and in most cases all you can do is accept that after thirty days an advertiser may very well just yank the campaign. The answer may be in finding those companies who are less risk-averse and more inclined to think long-term, which means you as the site owner will have to think long-term as well.

The next article will cover long-term sponsorships and endorsements. May we all be as lucky as to find more folks who think like Register4Less out there.

Feb

17

Although most of you will rely on the income provided by running ad network ads (and Google AdWords falls into this category), you may occasionally find yourself at the receiving end of an inquiry directly from an advertiser. This sort of thing often happens when you run a site that is not only niche-specific, but consumer-heavy. Do you have a lot of 18-25 year olds visiting your site? They’re probably the ideal market for energy drinks. Do you have 50,000 or more of them collected in the palm of your hand? Start-up energy drink companies will probably want to talk to you directly.

There are a couple of reasons for this. Firstly, they likely can’t afford to hire a big ad agency like Ogilvy Mather to come up with creative, and as a result don’t have access to their media buying channels. Secondly, they’re hoping to save a bit of cash by dealing with you directly. Savvy marketing execs know that site owners only collect around 50% of the gross ad revenue. If they offer you 75% of what they normally would’ve paid, they get to save 25% and you get 25% more.

But negotiations with advertising clients can be fraught with weird little twists. The first rule of negotiations is to be prepared to walk away from the deal. If you don’t have that ability, you’ll be played like a violin by the first veteran marketing exec who drops you a line. Most of them aren’t actually out to screw you over, but remember that their interests lie in getting the best return on investment for their advertising dollars and carving your end of the deal down to the bone helps them fulfill those interests. If they didn’t do that, they wouldn’t be doing their jobs and probably deserve to be fired.

Assuming that you’re prepared to stand your ground, before you go into negotiations you need to decide what the absolute minimum is that you’re willing to accept for a campaign. This means that the very second that the advertiser goes below this value in their negotiations, you politely inform them that you aren’t interested in entertaining their offer. And stick to it!

How you determine your rock-bottom line can vary, but there’s a great rule of thumb you can use that can be modified by how much you need the money. Taking your present situation into account, ask yourself: “At what point does the offer become more trouble than it’s worth to me?” I can almost guarantee that if you’re new to this game you’ll lowball yourself, perhaps quite dramatically. Unless you’re fairly confident in this business, I’d suggest you take your rock-bottom figure and double it. That’s probably going to be closer to the truth of what an advertiser should be paying.

You can justify your asking price if you have a good handle on your site’s demographics. As mentioned in The Book, try to do a decent survey once a year. It can help a great deal if you have third-party verification; some advertisers are getting wise to site owners that claim they have millions of page views and readers but have no evidence to back these claims. Unverified traffic numbers can indeed mark you as being a higher-risk buy, and that will be reflected in the offer you receive.

Most campaigns from advertisers that are new to your site will be preceded by a “test run.” This involves running a smallish quantity of ad impressions — say, fifty thousand to five hundred thousand — over a period of up to a week so that the advertiser can gauge how successful his campaign will be and thus whether or not he’ll be committing to a larger campaign. If you agree to this insist on being paid, and paid up front. Just because it’s a test it doesn’t mean that your ad inventory should be free. After all, the advertiser is still getting his message in front of your audience. That the message is in the guise of a test is immaterial.

If you finally come to terms with an advertiser and he offers you a buy, be sure to examine the terms of payment very carefully. Some may slip in a “Net 90″ or the horrifying “Net 120.” I see no reason why they shouldn’t pay you every month. If they want to pay you after completion of the campaign, that’s fine too, but you should ask for at least 25% up front. Advertisers will ask for all of the terms they can that are in their favour; you should do the same. Negotiation is ultimately about compromise to which both parties can agree.

Feb

16

In the book I asserted with much vigour that CPA deals (Cost-Per-Action) are to be avoided by site owners. A brief re-cap as to why: CPA deals place zero risk on the advertiser and all of the risk on the site owner. The advertiser only pays you after three things happen: 1) a reader sees the ad, 2) the reader clicks on the ad, and 3) the reader either buys something or signs up for something on the advertiser’s site. CPA deals can pay $5 per action and up, but the reason why they offer so much is because they’re not risking anything to obtain that sale or sign-up. Meanwhile, the site owner has given up x (where x could equal hundreds of thousands) ad impressions that could’ve been running even a low-paying CPM campaign that ends up paying better. Also, don’t forget that you’re at the mercy of the advertiser’s creative abilities. If their ad creative sucks like void, no one will click on it much less sign up or buy anything from the advertiser.

One of my readers did point out an exception to what I consider the Hard Rule on CPA campaigns: if you review books, music CDs or similar, you might as well put up the affiliate links anyhow. Affiliate deals (such as at Amazon.com where they pay you up to 8.5% for sales that come from your traffic) function exactly as CPA campaigns; you get paid when a sale or other action is completed. If your content includes reviews of consumer items, why deny yourself the opportunity to make a little extra passive income? You probably won’t be able to light cigars with the cash you earn this way unless you have a very traffic-heavy site, but fifty dollars here and there does eventually add up.

Other than this notable exception, I still stand by the argument that advertisers should be discouraged from using CPA campaigns. I turn down affiliate and CPA deals every week, and this annoys those advertisers that want a free lunch at the cost of your valuable site space. I say stick to CPM and CPC deals and insist that the advertisers bear at least some of the risk.

Feb

10

MfC Has Returned

February 10, 2007 | Leave a Comment

We’re back! You can expect a few posts a week for the next few months while I ramp up guest columns and other useful content. Thank you for bearing with me, and I hope the information I provide here will help you earn that beer money or at-home wealth you’ve been jonesing for. - JDF


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