Hell Has a New Name: The Local Online Advertising Media Buy
So continuing on in my local online advertising series we now encounter the inevitable desire of a local client. Placing online display ads in local media. You usually encounter this more when a client is paying you a retainer or percentage of spend. The local clients reasoning is just in wanting to place online display ads on their local news, newspaper and media websites. Since they used to or may currently still advertise in the newspaper it’s only natural to think they want their ads on the newspapers website. Here’s the issue: Local newspapers are out of their minds with the pricing they charge. Let’s take an example of a media buy I am currently in the process of negotiating (Keep in mind, this is local, so the numbers are a lot less then your affiliate marketing style media buy):
Price: $8,970
Length: 2 Week Run
Total Impressions: 601K Impressions
Effective CPM: $14.93
Estimated CTR: 0.12% (Based on the average ad that has run on the site in the same position in the same niche)
Estimated Clicks: 720
Estimated CPC: $12.45
Estimated Amount of Leads at 5% CR: 36 (Based on an estimate I have in my mind of how this offer is going to convert)
Estimated Cost Per Lead: $250 (This type of lead is worth $30-$40 on the high end)
At that kind of cost per click, I can buy media pretty much anywhere else for a heck of a lot cheaper. In addition, the amount of impressions is not guaranteed, however its a percentage of the available inventory on the site based on previous months and you can be guaranteed that the impression count is inflated. A $15 CPM is actually reasonable compared to the CPMs i’ve encountered for other newspaper websites. In fact i’ve seen as high as $55 CPM (hugely popular newspaper website) and let me tell you the traffic was NOT worth the monies.
It always amazes me how pricey print and traditional media buys are- even on their sites. The advertising industry is changing rapidly, and dollars are moving to online faster then ever. While I completely understand they have to cover costs, it has to be valuable for a client to consider the purchase.
Thankfully, in a few years, newspapers will be a thing of the past. (Along with their shitstain websites.)
The more I investigate local, the more I realize just why the majority of small, local businesses fail fast and fail hard. Too many are basically just suckers who only succeed in perpetuating the livelihood of industries whose job it is to empty wallets without being held responsible for results.
And few seem interested in smartening up. Sounds like pretty much every other market. Buncha suckers waiting to be fleeced and a handful of players.
have you considered that the local media company is outsourcing their service?
@Louie – I have to admit, I have no idea what your talking about. How can a local newspaper website outsource their service to someone else? Their service is placing an ad on their website.
Sounds like some very expensive advertising for a company that has cash to toss at advertising and isn’t looking for an immediate return.
This is what is giving ex-journos like me and others a chance. They still don’t get it. Not that I’m selling a lot of local yet, but I have.
-kpaul
Brandon, what a shame! I suppose a fool and his money are soon parted. All the much better for those rare small businesses that do get it.
good break down. $15 CPM you can’t justify. Unless the client is hoping for one house to sell in real estate or something big ticket
I agree, that’s costly. However, it’s existing potential readers that is most tempting to buyers. It may not be the biggest numbers, but compared to others changing their minds on click, are loyal indeed! What do you think?
Ya, you aren’t kidding.
I’ve seen some media buys for a print edition of a newspaper rated at $50k for a saturday edition.
Locally, there’s a CPC local ad network that’s charging clients $1 CPC. I’m tempted to create a network of MFA style sites, though I doubt the payback would be very lucrative. (high margin, crappy number of CTRs).
@ Mr Wee – What local ad network are you talking about? 🙂
@AdHustler
there’s a local Asian blog network/aggregator that sells ad on the blogs it’s recruited.
They’re selling the clicks for $1 apiece, which is why it might make some sense to hire an indian/filipino to create a few blogs and arb the difference between revenue and the dude’s salary.
You see… for big companies who are interested in banding those 50$ CPM its not too much, however if you apply it to performance marketing you cant succeed.
Leave the big newspapers for the branding advertisers =P
I agree with AOXtreme. I run a local website in a smaller college town and we also have ad rates that performance marketers would laugh at. One thing you need to factor in is the value of local branding. Local advertisers can justify paying these high CPMs not because of the performance but because of the branding they receive within their targeted demographic.
Jesus, I was sulking. Guess last month was taking a bigger toll on me than I thought. Oh well. Roll with the punches.
I personally see there’s a point to branding, sure. But not at those ridiculously high CPM’s. I’m not sure what brand awareness is worth, does anyone have insight into that? (I’ve always wondered about this) I figure people will tend to be drawn towards your brand when they’re shopping and if you’re big that could work…
you can see that there is a massive growth in online advertising these days, google paved the way on ppc *,`
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