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Cost-Effectiveness  

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Doing Business on the Web

These days, the World-Wide Web is clearly the hot market in which to sell.  While estimates of the number of people accessing the Web vary widely, the best current estimates place traffic at over 150 million users.   Even conservative estimates run to about 100 million users - and the number has been growing at a phenomenal rate for the last several years.  When you consider that the Web itself was only "born" in 1993, growing from zero to 100*150 million users in only 7 years is absolutely staggering!  Furthermore, income produced by the Web has gone from virtually nothing in 1995, to an estimated $5.9 billion in 1999! Clearly,  exposing even a fraction of 1% of those users  to information about your business could result in a very large increase in sales. 

Large corporations are very well aware of this huge electronic market.  More than 98% of large corporations now have a Web site.  Of course, they can afford to spend piles of money on designing and maintaining a site.  An independent survey of a representative sample of companies showed that these companies spent an average of $100,000/year on their Web sites in 1996.  Some spent $1 million or more.  If yours is a small company, you clearly can't afford to do that.   But, does that mean that you can't do business on the Web?  Not any more!  

Now, BetterBusinessWebs provides you with a number of affordable, cost-effective options for getting your business on the Web.   We make it easy for you to establish a presence in cyberspace, at a price that compares very favorably to other, more traditional means of advertising.  And you don't have to be a computer nerd to understand it!  We take care of all the technical details for you, so you can concentrate on doing what you do best: running your business.

Cost-Effectiveness of Advertising on the Worldwide Web vs. Other Forms of Advertising

The advertising industry rates the cost-effectiveness of various forms of advertising in terms of "CPM" - cost per thousand ("M" for the Latin mille, thousand) people exposed to the ad.   This is the cost of an ad, divided by number (in thousands) of people exposed to it.  It also makes good sense to factor in the length of time the ad is available, since the longer the time, the greater the opportunity for people to be exposed to it.  Studies have shown that, "for every three advertisements viewed, the average consumer will ignore two.  It takes an average consumer nine exposures to an ad before the ad is readily remembered.  Therefore," recommend Jay Levinson & Seth Gordon, authors of the bestselling Guerilla Marketing Handbook, "a specific ad should be run at least 27 times in media directed toward a specific consumer niche" in order for it to be likely to reach consumers in that niche.   That being the case, let's compare the cost of running a modest-sized ad at least 27 times in several popular media in the Sacramento, California, area.  For this comparison, we'll examine the cost of running an ad in the major metropolitan newspaper for the area, the Sacramento Bee; on a news radio station, KFBK, during peak traffic hours; and in the Pacific Bell Yellow Pages; versus the cost of a couple of BetterBusinessWebs' options.

Summary of Comparative Advertising Costs to Achieve 27 Exposures to Ad

Comparison of cost to run comparable ads in various media long enough to achieve at least 27 exposures in target market.
*Yellow Pages  nomenclature:   DTQ = Double Triple Quarter        pck = process color knockout
  Advertising Medium Total Cost

CPM

Cost to achieve at least 27 consumer exposures to ad Newspaper (10 column-inches) $15,000 $51.19
Radio spots (7 days X 4/day, @ $250) $7,000 $37.04
Yellow Pages (DTQ process-color knockout) $23,484 $30.30
BBW One-Page Web (for one full year) $1,000 $ 0.0149
BBW example custom Web $7,000 $0.1045
  1. Newspaper ad: Let's consider  a hypothetical ad 2 columns wide by 5 inches deep, that is, 10 column-inches.  To run the ad once on a weekday, when the paper's circulation is about 284,000 people, at $81.75/column-inch, would come to $817.50.  Once on Sunday, when the circulation is about 349,000, at $104.63/column-inch, would run $1046.30.  However, since we're going to run it 27 times, we can get a discount.  By agreeing to run it at least 15 times in 30 days, we can bring the price down to $50/column-inch.  Therefore, we decide to do this for 2 months.  That's 10 column-inches X $50, i.e., $500 X 30 = $15,000.  Divided by a weighted average circulation of 293,286, that gives us a CPM of $51.19.
  2. Radio spot:  A 30-second ad appearing 4 times a day during peak traffic hours runs about $1,000, or $250 each.  If we run it for 7 days, that will be 28 times; at $1,000/day, that comes to $7,000.  And of course, that's not counting the production cost of the ad.  Obviously, the quality of the ad will have a lot to do with whether it bores listeners and puts them to sleep (posing a severe hazard during rush hour traffic!), or amuses them or does something else catchy to get their attention.  Chances are, to produce a catchy, high-quality ad will cost you a good bit more than reading a dry script yourself in the radio station's recording studio.   If 10% of the entire population of the area typically tune in to that station (a very generous over-estimate!), that would be about 189,000 listeners.  That would give us a CPM of $7,000/189, or $37.04.
  3. Yellow Pages display ad:  Pacific Bell tells us that their directory reaches about 775,000 people in the Greater Sacramento area.  For consistency, let's say we run roughly the same size display ad in the Yellow Pages as we ran in the newspaper.  However, even with a display ad, we still need a basic in-column listing in the alphabetical section, so we need to consider the combined costs.  A minimum listing with our company name and phone number in bold, and an "anchor" (reference to our display ad) will run $25.50 per month in the Sacramento Pacific Bell Yellow Pages.  The nearest comparable size ad to our 2 column by 5 inch newspaper ad is what is called a "Double Triple Quarter".  With no color added, that runs $1,118/month.  Together with our listing, that makes a minimum total of $1143.50/month - except that we don't have the option of running it for any fewer than 12 months, since the phone book is issued once a year.  Therefore, our total comes to 12 X $1,143.50, or $13,722/year.  Pac Bell tells us in their literature, however, that color sells and SIZE sells.  We can add  a  bit of color by going with the 4-color option (blue, green, red and black); that's $1453/month; or a total of $17,742/year.  Of course, that's not terribly effective on a background of cheap yellow paper.  We can increase the effect by going with a "knockout" ad, color on a white-colored background - that's $1733/month, or $21,102/year. We can increase the impact still more by using full-spectrum "process color": that comes to $1957/month, or a total of $23,484/year.  Divided by a distribution of 775,000 customers, that gives the Yellow Pages ad a CPM of $30.30.

 

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Total Cost to Advertise in Various Media
(Click here to see larger version of graph [51219 bytes])
Note: "YP" = "Yellow Pages"

4. Web advertising: Let's consider several options:
  • BetterBusinessWebs Small Business Special One-Page Web - Since the Web is available every day, 24 hours a day, even one month would be enough to make 27 exposures possible.  Therefore, for a cost of only $100 (see Classified Advertising rates or Small Business Specials), you could provide as much potential exposure as with two months of newspaper advertising, run every other day.  That's $100 for the Web, versus $15,000 for the newspaper!  However, since we had to compare against a Yellow Pages ad running for a year, let's compare a year of Web advertising.  If you commit to a full year, you get a break on the price, which drops to $1,000.  That's $1,000 for the One-Page Web vs. $23,484 for the Yellow Pages (both in full, glorious color)!  Of course, it's still not really a fair comparison, because, for that price, you get only 5" by 4 1/2" in the Yellow Pages, versus a full page and a half in the One-Page Web.  CPM = $1,000/(67 million/1000) = $0.0149!  That's just under a penny and a half per thousand potential customers!  (Note: these calculations are based on the conservative estimate of 67 million Web users.)
  • BetterBusinessWebs Custom-Designed Web Site - The price will depend entirely on your requirements.  Obviously, the larger your site and the more custom graphics, intricate layout and fancy programming you want, the more it will cost you.  However, it's safe to say that you can get a very nice, custom site consisting of a few pages, with custom logo, background and buttons for substantially less than the price of a week's worth of 30-second radio spots (i.e., way under $7,000).  And for the price of a year's worth of our example process color Double Triple Quarter knockout ad in the Yellow Pages, you can get a very large site with a couple hundred pages of simple text; or a fairly large site with a substantial catalogue.  Of course, if you want a Shopping Cart with secure on-line credit card transactions to go with your database catalogue, combined with animated graphics, full-motion video and stereophonic sound, that's going to run you more.   At least this gives you a feel for the range and the comparative value.  And don't forget: on the Web, your potential exposure is not to 284,000 or 775,000 readers or listeners, but to 150 million potential customers! Using the example of a fairly lavish site equal in price to 1 week's worth of radio spots, $7,000, that gives us a CPM of $0.046 - only 4.6 cents per thousand potential customers! 

Note: "YP" = "Yellow Pages"
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Cost per Thousand People Exposed to Ad
(Click here to see larger version of graph [60,575 bytes])


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