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Internet Advertising

Internet Advertising. UW CSE454 10/ 28 / 10 Mike Mathieu mike@frontseat.org. I know I’m wasting half of my ad budget. I just don’t know which half. 2010 Global Ad Spend. $ 448 Billion. Industry Structure. $$$$$. Media. $$. $. $$$. Advertiser. Audience. Ad. The Great Divide.

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Internet Advertising

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  1. Internet Advertising UW CSE454 10/28/10 Mike Mathieu mike@frontseat.org

  2. I know I’m wasting half of my ad budget. I just don’t know which half.

  3. 2010 Global Ad Spend $448 Billion

  4. Industry Structure $$$$$ Media $$ $ $$$ Advertiser Audience Ad

  5. The Great Divide • Emotions • Indirect benefits • Banners, TV, stadiums Brand Direct Response • Transactions • Gross profits • Search, coupons, 1-800, radio, mail

  6. ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü

  7. Conversion Funnel Ad Impressions Clicks Conversions Revenue

  8. Monetizing Traffic LANDING PAGES $ per Transaction TRAFFIC Conversion Rate Search-Paid Search-Free Affiliates Display Ads Syndication Email Mobile Offline Gross Margin CTR CR x CPA = RPV

  9. Share of Voice Costs $$$ Cost Per Action 100% 0% Reach

  10. Conversion Potential vs. Price

  11. Real World Example

  12. Real World Example Impressions 4.4M Clicks 2078 • RefSrc on URL • Drop cookie • Pass RefSrc upon conversion • Match with ad spend • Calculate CPA RegClick 69 Registrations 29 CTR=0.0469% CPC=$0.65 eCPM=$0.31 CPRegClick=$19.69 CPReg=$46.76

  13. Bid Management

  14. Industry Structure $$$$$ Media $$ $ $$$ Advertiser Audience Ad

  15. Online Advertising Risks Revenue Share Cost Per Click (CPC) Cost Per Impression (CPM) Cost Per Action (CPA) Subscription / Sponsorship Publisher Advertiser Balance of Risk

  16. RPV Optimization:Problems with Sort by CPC

  17. Sort by (CPC_Bidx CTR) RPV Optimization

  18. Keyword Opacity

  19. Landing Page Analysis What?? No “Christmas”

  20. No “Christmas” here either! Landing Page Analysis

  21. Industry Structure $$$$$ Media $$ $ $$$ Advertiser Audience Ad

  22. End Users Don’t bug me Unless I like what you have to offer

  23. Better Matching • Context detection • GPS, location • App vs. content • In-game • Info seeker vs. transactor • Calendars/schedules/events • Social networks/status • Twitter - now • Behavioral – esp. w/knowledge of specific site behaviors • Contextual • Privacy • Google “AOL search data”

  24. Context? • Flowers • Mentos gum • Trial Prep • Credit score • Cosmetics • Hampton Inns • WeightWatchers • Vacation Home Rentals • Home Depot • Web Hosting • WebMD • Colon Cleanse – Warning • My Teeth Aren’t Yellow • Classmates.com

  25. Testing

  26. Testing

  27. A/B Split Test

  28. Testing Sample Size, margin of error, confidence x= Z(c/100)2r(100-r) n= N x/((N-1)E2 + x) E= Sqrt[(N - n)x/n(N-1)]

  29. Sample Size Problems • So many ideas, so little to sample… • Disproportionate advantage to scale • Multivariate testing • Taguchi Method • Method for calculating signal-to-noise ratio of different parameters in an experimental design • Allows optimization with A/B test of each cross-product

  30. Testing

  31. Repetition

  32. Before After Professional Photos We observed an immediate 30% increase in conversion rates

  33. Fact Sheet Design

  34. Opportunities Today • Conversions • Low-RPV • Waste • Simplicity • Risk • Scaling local, hyperlocal • Data exchanges • Under-monetized sites • Context

  35. Summary • Conversions • Risk • Context • Testing

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