Buying advertising

Web site auditors

Auditors accurately measure the usage of different sites in terms of the number of ad impressions and clickthrough rates.

Run of site

Cost per 1000 ad impressions. CPM is usually higher for run-of-site advertisements where advertisements occur on all pages of the site.

Results-based payment

Advertisers pay according to the number of times the ad is clicked on.

Ad networks

Brokers who place ads for advertisers over a range of media sites using different payment models such as CPM, CPC and CPA.

Banner advertising is typically paid for according to the number of web users who view the web page and the advertisement on it. These are the 'ad impressions' referred to earlier.

• When payment is made according to the number of viewers of a site it is important that the number of viewers be measured accurately. To do this independent web site auditors are required. The main auditing body in the UK is the Audit Bureau of Circulation Electronic, ABCelectronic (www.abce.ora.uk).

Banner advertising is purchased for a specific period. It may be purchased for the ad to be served on:

• according to keywords entered on a search engine.

Traditionally, the most common payment is according to the number of customers who view the page as a cost per thousand (CPM) ad or page impressions. Typical CPM is in the range £10-£50. Other options that benefit the advertiser if they can be agreed are per-clickthrough or per-action such as a purchase on the destination site. Although initially media owners were able to control charging rates and largely used a per-exposure model with the increase in unused ad inventory, there has been an increase in results-based payment methods. Organisations such as Valueclick (www.valueclick.com), now operate ad networks where the advertiser only pays for each response. This advertising model is similar to the affiliate method (see the earlier section 3a Affiliate marketing) except that with the affiliate method, the referring site is usually paid a commission based on the cost of the item sold.

Media planning - deciding on the online/offline mix for advertising

Cross-media optimisation studies (XMOS)

Studies to determine the optimum spend across different media to produce the best results.

This decision is typically taken by the media planner. As we noted in the section on 'Planning integrated marketing communications', the mix between online and offline spend must reflect consumers' media consumption and the cost/response effectiveness of each medium. But, depending on the agency used, they may play it safe by putting the ad spend into what they are familiar with and what may be most rewarding in terms of commission - offline media. Many cross-media optimisation studies (XMOS) have shown that the optimal online spend for low-involvement products is surprisingly high at 10-15% of total spend. Although this is not a large amount, it compares to previous spend levels below 1% for many organisations.

XMOS research is designed to help marketers and their agencies answer the (rather involved) question 'What is the optimal mix of advertising vehicles across different media, in terms of frequency, reach and budget allocation, for a given campaign to achieve its marketing goals?'

The mix between online and offline spend is varied to maximise campaign metrics such as reach, brand awareness and purchase intent. Table 8.4 summarises the optimal mix identified for four famous brands. For example, Dove found that increasing the level of interactive advertising to 15% would have resulted in an increase in overall branding metrics of 8%. The proportion of online is small, but remember that many companies are spending less than 1% of their ad budgets online, meaning that offline frequency is too high and they may not be reaching many consumers.

Table S.4 Optimum media mix suggested by XMOS studies
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