A client of mine was recently approached by ESPN. They wanted a meeting to see if my client would be interested in digital advertising on their network.
In your role as a business owner or marketing manager, you were surely approached for similar things before.
Think back to how things progressed from there.
During the meeting, you’d be wowed by the beautiful sales deck and the impressive numbers shown on screen. But by the end of the presentation, you still can’t really decide if it’s worth the price.
Why does that happen?
Let’s understand this using a simple example.
Imagine, I walk into your office today and offer you a car for $200,000. Will you buy it?
What if I told you now that it’s brand new?
And it’s the latest model Ferrari.
With a V8 engine that produces 600 horsepower.
To top it all off, it also comes with a 10-year warranty.
Suddenly, you’d jump at the deal because you can buy it from me at $200,000 and resell it for a 300% profit.
The reason your judgement changed so fast was that more information became available. Information is the key to good decision making.
The same thing applies when evaluating digital sales proposals.
I’m going to show you how to spot profitable proposals right now.
There are 3 things to watch out for when evaluating digital sales proposals from websites and networks. It’s important to find out the first 2, so you can use them to calculate the 3rd one.
#1 – Reach
Digital salespeople will almost certainly start their presentation to you with these 2 things – “Readership Numbers” and “Readership Profile”
They will try to impress you with big numbers and solid readership profiles.
Let’s approach this using the earlier example of ESPN and my client.
My client deals in sports equipment. If ESPN tells my client
- they have 1 million Singaporean readers every month
- and the readers are all athletes who spend money on sports gear
Should my client now take up their deal for $1,000 a month?
The answer is “We don’t know”.
$1,000 a month sounds like a reasonable amount. But the truth is that we simply don’t have enough information to make a decision yet. ESPN might have 1 million readers. But does it also have influence over those readers?
We need to find out more.
In addition to the quantity, we must also check for quality.
In addition to the numbers presented, request for details on:
- The average number of pages per visitor session (readers usually view more than 3 pages on websites they like)
- Bounce rate (this is the % of people who left the website after seeing only 1 page. Ensure this is BELOW 60%, which usually ensures no junk traffic sources are used to boost their numbers)
- Average time on the website (visitors who are engaged will spend at least 3 minutes on content-heavy websites. Anything below 1 min 30 sec is considered poor)
#2 – Targeting Options
Now that we know more about the audience on the network, our next question should be “How exactly will you help me reach your audience?”
This is usually the part where you will be presented with the various advertising options.
The options can range from banners to front-page articles to video slots etc.
The digital sales consultant might then suggest buying a front-page banner. He will tell you the front page banner gets over 300,000 views in a month.
Is that useful?
That‘s because what you’re looking for isn’t views, but actual readers. Don’t be fooled by huge page view numbers and high viewerships. By itself, these mean nothing to you. In fact, large numbers more often than not suggest poorer targeting and generally less optimal results for your campaign.
Internet users have developed a condition known as “Banner Blindness”. 300,000 views might just mean 300,000 ignored your ad completely.
You’d rather have only 10,000 views and 1,000 readers instead of 300,000 views and 300 readers.
Ask the sales consultant how many CLICKS on your banner they predict. If it’s an article, ask how many READERS they expect.
#3 – Cost-Effectiveness
We’ve now found out about the quantity and quality of the network.
We also have an estimate of how many banner clicks or article views we will get.
With this information, we can now calculate the MOST IMPORTANT metric for our decision making – Cost-Effectiveness.
Take the PRICE you are quoted and divide that by the number of READERS or CLICKS you expect.
For example, a front-page banner on ESPN might cost $5,000 for 1 month. The salesperson predicts it can give you around 100 clicks. Hence, your cost-per-click is $5000/100 = $50 per click.
By itself, this number might still not be enough to help you make a decision.
What I do is to compare it against alternative choices such as Google SEM, FB Ads, banners on other sites/networks etc. If you can get much lower cost clicks with the same quality of traffic, then it makes sense to spend your budget there first (more about this in my other article on managing marketing budgets effectively).
Evaluating a digital sales proposal from a website or network can broadly be categorized into Reach, Targeting and Cost-Effectiveness. Use these 7 steps to then decide if it’s worth your money:
- Study the reach & demographics of the readership
- Check the quality of the readership
- Find out the price of different targeting options
- Figure out how many click/readers you can expect
- Divide the price by the clicks/readers to get your cost-per-click/reader value
- Compare the cost-per-click to other alternatives
- Decide if it’s worth the investment
Finally, if you mention this method to your sales consultant, they might get desperate and try to pressure you into making the purchase. Figure out how digital salespeople are pressuring you into signing deals.
Evaluating a marketing proposal is not too different from investing in the stock market.
Marketing proposals can change, but the fundamentals cannot. Do your research, and believe in your numbers.