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Online marketing is relevant now. No doubt about it. One of the key ingredients of marketing is advertising. Online advertising is still in its infancy but is maturing fast. Most people know about text ads, banner ads, pop-ups, and search engine advertising. Unfortunately, marketing is much more than advertising. Sophisticated marketers generate much better results - branding, higher revenues, etc. Most large companies with multi-million dollar budgets do not get this simple point - especially in the online world. It used to be amusing but increasingly it is disappointing to see companies spending millions on online advertising without even a simple website log analysis capability, leave aside sophisticated marketing analysis capability. Well, the online marketing, especially advertising, world is all about numbers. The good news is that these numbers are readily available. One needs to have the discipline to collate them to make better decisions. Targeting is the key issue in advertising - online or offline. This is what differentiates ad views from "profitable ad views".
Conventional wisdom is that the greater the number of people who see your ad, the greater your chances of getting the desired result, say, making a sale. However, in reality:
- Not all people who "see" or "click" you ad are going to "buy" your product
- Of all the people who "buy" your product, all will not spend the same amount i.e. some will buy more than others; some will become repeat customers others will not
- Of all your customers, some will generate more "profitable" sales than others. For example, someone who buys your product but frequently returns/replaces them is a less profitable customer than someone who doesn't.
What percentage of "clicks" will result in "buys"? What percentage of "buys" will be "high value"? That depends. However, if one had the capability to only get "high value" buys, wouldn't that maximize the bang for the advertising buck?
Targeting is all about achieving this goal. A well optimized campaign can generate equal or more revenues using fewer dollars by focusing on getting only "high value clicks". There are many factors that drive targeting:
- The site where these ads are being served
- The time when they are served. In the offline world, ever wonder why infomercials are broadcast in the middle of the night? Why personal injury lawyers advertise in the middle of the day?
- Where i.e. the geographic areas the ads are served?
- What form are these ads in - text ads or banner or popup?
If your highest value customers are Tibetan monks who surf in the middle of the night then you will get the highest marketing ROI from ads that are served on the sites that they visit, the specific pages that they visit, of course in the middle of the night. Please do not forget that monks prefer text ads! Google made targeting easier. If you are searching for a term then it is logical to assume that you are interested in products and services associated with it. Google's search advertising is one of the most effective means available to an online marketer.
MySpace has taken this in another direction. Human beings are social animals. They are likely to "buy" where they congregate. Or what they buy is a congregation! Remember the Saab owner community? TACODA provides targeting through buyer behavior - in this case predicted based upon their surfing pattern. If you visited a car site then we should serve you a car ad. Quigo is targeting using context associated sites and even further by letting advertisers pick specific pages on that site. The battle between Yahoo and Google is shaping up to be very interesting. The former is the undisputed king of page views. The latter is better at converting each to higher profits. Who will prevail?