You may have heard the conversion funnel metaphor applied to online advertising and marketing.
As you move from the wide end of the funnel to the narrow end a lead becomes more qualified and more valuable.
The conversion rate of a well targeted search ad is more likely higher than that of a random banner on a web page.
So we use context, behavioral targeting and other methods to try and decipher a person’s intentions and get the right ad in front of the right person. This raises the value for the advertiser and often raises the cost of the ad as well . . . but wait.
Some of the highest cost ads are the display ads on local news sites. By and large these ads are not highly targeted. Even if a site belongs to a network that does behavioral targeting, those ads are generally sold at a lower CPM than the “untargeted” ads that are sold at the local level. There are exceptions, of course.
The reason is that these ads aren’t being sold based upon value, but based upon existing legacy (print) relationships and perceived value due to the strong brands newspapers have in their local communities.
The times they are a changin.
Groupon style deals, pay-per-click search ads (an old standby by now), behavioral networks all move the market level of ads down to the real value zone. No more smoke and mirrors.
I feel like the bad guy to have to point these things out, but if you think transferring your revenue from legacy areas to digital is your only concern, you need to think again.
When someone compared “print dollars to digital dimes” they didn’t just mean that less money was being spent online. The cost to market is so much less you’d better have some hefty scale ready if they actual do hand you a dollar.
To add to the challenge is the ever growing inventory available.
“But that inventory isn’t quality,” you say.
You’re not paying attention. With behavioral targeting of ads, the value and quality isn’t necessarily dependent on the ad location.
It’s the context of the user that is important, not the context of the web page.
All that matters is the conversion, and getting the customer to that point is getting cheaper and cheaper.
So much so, that I anticipate a day when annoying ads are a thing of the past. The perfectly targeted ad is actually information that I want.
I might even pay to get it. ; )