Online Advertising Statistics
I recently had the opportunity to dig around in the marketing effectiveness data of a friend’s company. The results were really interesting, so I figured I would share. This company is an ecommerce company that sells a physical product to consumers online. They sponsor several blogs, one forum, do a significant amount of offline advertising and spend on Google CPC ads. Conclusions:
1. Over the time period organic search on Yahoo and Google generated $100Ks of revenue and cost nothing
2. Google adwords returned $18 of revenue for each $1 spent on ads, around 18x the effectiveness of the offline advertising.
3. The rates on the blogs are not efficiently priced, there is wide variance in cost -effectiveness across blogs.
One issue with online advertising is that there is a limited audience. It is often argued that you reach an entirely different set of potential customers when advertising in a different medium and that you cannot reach the same volume of people online as you can offline. Therefore, while online advertising may have a higher ROI, offline advertising is still important. That may well be true for some very mass-market things that don’t get a lot of search attention, or for companies with a much larger marketing budget, but in this case the company is spending most of their ad money on offline media and getting the majority of their visitors from online marketing.
Someone just asked me how I came up with the offline advertising impact. I used a multiple regression model that I will write about tomorrow.
Another modification - it is important to note that I used the direct sales impact from the online ads and the indirect sales impact from the offline ads. This isn’t really fair and it actually underrates the effectiveness of online ads (because they have an indirect component as well) - see this HBR article for interesting data on the indirect effect of online ads.
