Is ad targeting all it’s cracked up to be?
ClickZ has an interesting piece on the
question of whether targeting specific groups of people through Web
advertising will net a better return on investment (ROI) than advertising
without targeting.
Larry Braitman, vice president for business development at Flycast Communications, writes about his
company’s method for measuring the ROI of ad campaigns, called the “Rule of
Ratios.” It states that any increase in the cost of buying ads
should be offset by an increase in the results achieved. For example, if a $5
CPM buy nets a 1% response and the CPM is then bumped to $25, a 5% response
would be needed in order to
maintain the ROI (1/5 = 5/25).
Although the article focuses on content-based targeting, the same principles
apply to any targeting method, including viewer profiles, time of day, and so
on, he says. The complete article is available here.
In many cases, Braitman concludes, it doesn’t make sense to begin a campaign in a
high CPM environment and then sit back and hope your ads do well. It is far
more cost-effective to start off advertising on smaller sites at lower CPMs,
then begin the testing and learning process. Marketers must try promising new
targeting methods and technologies, he writes. But ultimately, they will
insist that any investment for additional targeting pay dividends.
