Advertising Basics for Online Marketing
“There is no such thing as good or bad media, it all depends on how it’s priced”
Many small business owners look to spend as little as possible on acquiring a customer, however the truly successful ones look at advertising in a different way mainly focusing on the lifetime value of any new customer. The business that can pay most to acquire a new customer and still be profitable, usually has bigger growth and can ride out any tough times.
Here are the most popular types of advertising & the pricing options
The most well-known form of online classified ads are offered by Google Adwords and if you’ve ever used Google to search for anything, the top 3 results are usually advertisements as are the boxes on the right hand side of the results.
Facebook offers this though its adverts manager and Twitter recently added advertising options for the UK market.
Banner or Display Advertising
These are usually image led adverts that you’ll see placed on various website and can be placed directly with the website owner or through the Advertising display network through Google or Microsoft (covering Bing & Yahoo)
Advertising in the main is charged in one of two ways.
CPM (Commonly known as Cost per Thousand)
Here you pay for every 1000 times your advert is displayed regardless of how many clicks. If you have a really great advert or offer, this is good, because whether 100 or 1000 people click, you only pay once.
CPA (Cost per Action/Acquisition)
Commonly known as Cost Per Click media. You only pay if someone clicks on your advertisement. Costs vary wildly depending on how competitive the market is.
Which method should you choose?
If you have the option to choose, it’s simply math. Normal mainstream adverts have a click through rate of 0.1 to 0.16% (10-16 clicks per 1000 displays) Multiply that by the Cost per click and see how it compares to the CPM rate.