Business Builder Report

Two main sources of data come from what you can collect yourself and data supplied from the location where your ad is displayed. In both cases the data you get needs to be managed in some meaningful way if you are to benefit from any kind of analysis. I’ve put together a spreadsheet based on some of metrics discussed in the last post “Advertising Days Are Numbered”.

The example shows two types of ad buys. The first is a CPM campaign where a block of 5000 impressions was sold for $25. The second is a CPA campaign where the CPA publisher was paid $15 per sale. All of the calculations are based on formulas outlined in last week’s article.

In the first case, the cost to advertise was fixed at a low rate and the earnings per click profitable at $.79 above the CPM. The eCPC although profitable was limited by reach into a market of only 5000 impressions. The extent of the market can only be determined by successive or larger buys until the eCPC starts to diminish.

The second ad buy was paid per sale. Although the cost was significantly higher the resulting sales were higher, eCPC was higher, and the reach significantly greater. While overall costs were greater so were the profits.

In both cases, the ad channels were profitable so running the campaign again would be likely be profitable. The reach in each case is subject to diminishing returns as the audience that will buy, does, and returns diminish. This means the larger the audience the longer it will produce profit.

The CPM contract favors the publisher because payment is made up front for impressions whether or not a sale is made. This means the risk is borne entirely by the advertiser. The CPA contract favors the advertiser because sales offset the cost of advertising so CPA Networks were established to match advertisers with publishers. The CPA advertiser compels a publisher by means of high payout per sale usually at a rate paid to an affiliate.

If you want to learn more about collecting data about advertising campaigns and channels of distribution an ad server is the way to go. If you search on the word “ad server” you’ll notice OpenX near the top and there’s good reason for that. It’s open source and delivers an essential range of data acquisition, reports and ad management tools.

business, internet advertising

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Brian Hack is an Internet analyst and business builder that writes for the Business Builder Report. He is a Publisher and Distributor of Audio + Ebooks located at http://waymore.info. You can subscribe to Brian’s waymoreEzine to get free Quick Video Tips about packaging your own ebook as well as information about making, marketing and advertising your own products and services.

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