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Pay Per Clicks, Top E-mail Marketing Tips


March 9, 2001

We were early admirers of GoTo.com's pay-per-click model ( ICONOCAST 01-Apr-98 : The Search Engine Future). Today, GoTo.com Sr. Director of Marketing Craig Wax tells ICONOCAST the directory attracted 37,000 advertisers and booked $103 million in revenue last quarter.

That's because, as GoTo.com President & CEO Ted Meisel puts it, "The first wave of the Internet was supposed to be about targeting, measurement and ROI, but it ended up being about impression-based advertising and offline marketing. A lot of VC dollars were spent figuring that out."

Figuring is what Ken Abbott does four hours daily. His task: monitoring positions of GoTo.com keywords to optimize his pay-per-click (PPC) average of $.50. Welcome to the brave new world of instant ROI. Says the New York-based marketing consultant , "The upper limit of banner CPM is $1.50 if you want to equal the performance of pay-per-click engines." No wonder impression-based sites have a hard time keeping up.

A typical advertiser pays $.17 per click at GoTo.com, says Meisel. "Compare that with the average impression-based CPC of about $5," he adds. A chief reason why sites like GoTo.com deliver lower CPCs is editorial environment. Meisel says, "We're most efficient for targeted needs. If ROS in newspaper is 'push,' we're 'pull.' Forget about the proxy."

In a world where everyone is trying to attract eyeballs, the mechanics are simple: you drive traffic, we pay for clicks. Wax notes the results speak for themselves: GoTo.com delivers $4-7 in sales for every dollar spent, compared with $.50 per dollar spent in advertising on the major search engines.

GoTo.com's success may well be the transparency it introduced to online marketing. Every time you initiate a search, each listing is shown with the price each lister is willing to pay for a clickthrough. Search for "online marketing" and you see that ReinventBusiness.com is willing to pay $2.52 for CTR related to that keyword. This "open ratecard" breeds a phenomenon called "closing the gap" (see sidebar).

But while this particular category is competitive compared to others, it's by no means the highest. Abbott notes that he has found one category, "help desk software," where the top bidder is willing to pay $11.58 for a click. As more marketers realize the name of the game, expect prices to rise quickly.

Top E-mail Marketing Tips

As part of our effort to present best online marketing practices, we asked top analysts and e-mail marketing services providers to share their do-or-die rules of e-mail marketing:

Establish goals in advance — If you don't know what you're trying to accomplish, chances are you will fail.

Empower customers — If you don't have permission, you're sending spam. Ask customers how and when they want to hear from you.

Dedicate adequate resources — E-mail marketing service providers such as Digital Impact or FloNetwork (now DoubleClick), can provide the infrastructure necessary to make e-mail work for you. Assign internal management to track your goals.

Target — Get the right message to the right user at the right time. Don't send e-mail on Mondays to business people. Consumers might read e-mail in the evening hours, so sending messages then will set you apart from the rest. Also, it's surprising that some e-mail marketers don't dedupe lists. Just this week, we received multiple e-mails from Dell!

Segment — E-mail is cheaper than postal mail, but good online prospects can be expensive and hard to find. Don't pummel opt-in lists with messages that don't appeal to the entire audience. Find out their interests and...

Personalize — Despite an abundance of technology, few marketers actually personalize their e-mail. Offer a better experience!

Control frequency — Our panel agreed that e-commerce players should not be sending more than 1-2 e-mails per month to customers.

Test everything — Optimal creative, messaging and frequency that works for one customer set may not work with another. Also, subscribers' tastes can change rapidly. Testing is the only way to make sure your offers are welcomed.

Next week, we'll discuss how frequency abuse by inexperienced e-mail marketers, even better-known brands, could be hurting the industry.

© 2001 Iconocast.com


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