December 18, 2017

Helping PR pros make smarter decisions

The Online Advertising Cost Fraud

The Online Advertising Cost Fraud

When Internet advertising started during the first Bubble, it was based primarily on cost per thousand views (CPM). Out of the rubble, came the “more cost effective” approach from Google and others of “pay per click” (PPC or CPC). Many argue that the latter — and online advertising in general — are more cost efficient ways of reaching people than print, TV, or radio advertising because it is “transparent” and “accountable.”

But that’s based on the presumption that one measures the success of any advertising campaign based solely on how many people you reach — or who visit your web site by clicking. But anyone who evaluates outcome of their marketing efforts in this way needs to have their head examined.

Advertising success must be measured in outcomes — purchases, for example. Yet that’s not always easy to do in all cases. While the Internet does provide some tracking options that can be appealing to advertisers, there will always be people who make purchases or take other actions that benefit the marketer without activating the appropriate URL, cookie, or other tracking device.

Indeed, print and broadcast advertising have used similar devices. In the online era, ads have often carried unique URL’s to try to track consumer activity. But these efforts precede the Internet as well. For instance, it is not uncommon for TV ads to carry unique toll-free phone numbers to relate sales and inquiries to specific ad campaigns, advertising outlets, or times.

But what about people who see a company’s ad multiple times — perhaps in different forms of media — and it then compels them to make a purchase? It can be extraordinarily difficult to evaluate specific actions related to specific ads even with the wonders of modern technology.

Now, this is not to say that online advertising is worse than print or broadcast marketing. Indeed, there are some very attractive benefits. But one must be cautious not to accept the notion that online advertising is by definition more effective or efficient.

Every advertiser must carefully assess the goals and objectives of their campaigns and deploy an effective mix of advertising and other marketing tactics. Measurement then must be attempted to develop as accurate a picture as possible of the effectiveness of the overall effort, as well as specific ads and outlets.

Regardless, one should not fall into the “eyeball cost” trap where you try to use CPM or PPC metrics to compare differing forms of media. Though the cost of advertising may often be stated in these terms — even in traditional publications and broadcast media — the market effectively sets the rates. Buyers will pay whatever amount they believe represents a good investment. Sellers will charge as much as they possibly can get.

As with the sale of a company that is often measured in multiples of revenue or earnings, the CPM or PPC numbers may be used to justify expenditures on paper. But it’s not how smart decisions are made.

Bottom line? Don’t drink the online advertising Kool Aid and dismiss more traditional media outlets. At the same time, don’t buy in to the Internet advertising doldrums and give up on new media opportunities. Try different things and evaluate how beneficial they are to the objectives you are trying to achieve.

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About The Author

Chip Griffin is the Founder of CustomScoop. He writes and speaks frequently about data-driven public relations. You can follow him on Twitter at @ChipGriffin.

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