WEB SITE ADVERTISING
MEDIA BUYERS' VIEW
profession seem to agree there needs to be a rational
way to put a price on Web Site Advertising. One Internet
advertising agency, ModemMedia, has proposed a pricing
model which has received considerable attention (Internet
World , May 1995, p.59). There needs to be an
examination of the ModemMedia pricing model from the
Media Planner/Buyer's perspective. It is important
to note that this model appears to be based on advertising
which is designed only to bring people who are browsing
somewhere else to the advertisers' own web sites by
use of an ad which is a clickable billboard connected
to a Web site which is the true ad. A cover blurb
plus a full story, so to speak. Yet, the traditional
media analogies used in support of the model range
from niche magazines to billboards to direct mail.
model has three elements:
the ratio of hits between the web site's log and
the number of file "hits" that make up the page
carrying the ad. Divide logged hits by number
of hits making up the page to calculate what we
can call "page views." Then call page views "reach."
repeat viewing of that page and call that frequency.
the success of viewings of that billboard ad in
moving readers to the actual web site and call
For use by
media buyers, problem areas include terminology, calculations
and value basis. The ModemMedia model apparently applies
niche magazine CPMs
of $70 to what are more billboard-like impressions.
A CPM of $2 might be more typical for outdoor posters.
And the model then applies a direct mail cost-per-person-opening-the-envelope
to those who enter an advertised site. It also counts
as impressions repeat exposure to the same page" in
one reading session. Magazine CPMs, of course, don't
count more than one impression per reader per monthly
issue, no matter how often the book is picked up or
as well as numerical formulae need to be understood.
Reach is a standard media measurement.
It refers to the number of unique, different people
exposed to a campaign or schedule of advertising.
This may be expressed as a whole number or as a percentage
of the total population being measured. In most media--broadcast
or print--this "reach" of a single ad is equivalent
to the rating of a single unit of advertising:
a 30 second commercial or page in a single magazine
issue. This equivalence is because there is a single
defined time period associated with the ad unit. A
viewer of a single commercial or a reader of a magazine
issue is only counted once by the standard audience
research used by media buyers (even if a reader picks
up a magazine issue 3 or 4 different times). Visits
to a Web site are somewhat analogous to magazine audience
impressions, not reach (see below). That is,
the computer process of counting hits--as used in
the ModemMedia model--deals with the number of time
a page is viewed. It does't distinguish between 5
people each visiting once (reach=5, impressions=5)
and one person visiting 5 times (reach=1; impressions=5).
Some have suggested that this should be a parallel
to magazine circulation, but that analogy doesn't
work: circulation is the number of copies available
for reading--it ignores how many times each could
be read and is a static figure. Web site availability
is virtually infinite, limited only by the numbers
of people who are equipped to read the content of
a site. Impressions should be counted as one per
visitor per month, or per whatever the time cycle
of changing site content may be. This would then
create a true parallel to other media.
of web advertising are substantially different. It's
as if a magazine had a device sensitive to touch and
all copies of a magazine were collected after the
issue life was over and the touch meters tabulated.
We wouldn't know who had touched or how often, only
the number of touches. It's also as if this magazine
meter ticked over every time the eye move to a new
article on the same page as an ad, and ticked again
if the eye noted a picture accompanying the article.
That, more or less, is how Web site hit count works.
three essential formulas in the ModemMedia Model:
A reach estimate (monthly hits divided by number of
hits used to load a page), which as discussed
above is actually an impressions estimate.
estimate, which also turns out to be an impressions
estimate, which charges for readers as if
they were sales.
formula starts with a way to estimate hits, ie: watch
the lower left corner of your Web Browser screen as
a Home page is loaded by your computer. In that corner
is a counter which records the bytes of the file being
received ("xxx" of "yyy." As the "yyy" number changes,
it indicates a different file being accessed).
page may consist of 5 or 10 files: The text, plus
various graphics (logos, photos, section headers,
up or down buttons, mail box buttons, "click here"
boxes). So, since the term "hits" refers to a count
of each file used in a page and the advertiser cares
about the page as a whole, ModemMedia's idea is to
watch the changes in the byte counter. Then add returns
to the top page from other parts of the site as hits,
and divide the total hits in loading the page or returning
to the top page into the monthly hit count reported
by the site. This then, says ModemMedia, gives an
estimate of reach.
For a start,
the browser alternates between the files in loading
the page. On my browser (Netscape,
the industry standard), the counter in the corner
appears to show that the downloading process alternates
between files, thus there are more hits apparently
being displayed there than the number that a Web site
log would report. Hence, ModemMedia's formula would
have the potential to underestimate actual visits.
counts returns to that top page as one hit to be added
to the divisor by the formula. However, most Web browsers
cache Web pages and documents, and so a return to
the page in question would very likely be--in actuality--a
page retrieval from the browser's cache, not an additional
access to the site. This means that a return to the
page during a single visit might well not add to the
site's hit count at all.
causes further underestimates of actual visits.
"frequency" estimate is based on returns to the home
page (presumably this is the page where the billboard
ad is). This involves multiplying the so called "reach"
estimate by the previously estimated number of returns
to the home page. Again, this would actually be an
impressions figure. Note that "reach" above already
counted these impressions, though now they are discounted
by two-thirds before being applied to the $70 magazine
cited for acceptance of ModemMedia's generous audience
counts is reference to the industry's crediting every
ad in a magazine with the entire reader audience measured,
even though not every reader may see every page. By
the same token, a web browser returning to the typical
home page on which the billboard ad was located may
not see that ad on the PC screen which displays less
than the full page in one screen. As stated above,
impressions should be counted only once per visitor.
While I have pointed out some minor undercounting
of visits in watching hits on the screen corner, the
overcounting of impressions caused by including revisits
to the same page on the same trip is a more extreme
exaggeration of impressions.
suggests that a direct mail value model of $1 per
piece which is opened should be applied to those who
click on the ad, which they estimate to be 20% of
those reached, and go to the web site being advertised.
This is based on an average price for a direct mail
piece of 75 cents and 75% opening of the mailing.
clicking on a link to an advertised web site seems
like a reasonable analog for opening a piece of direct
mail, but there are other issues.
for the moment whether or not the 75 cents and 75%
are realistic, there is an inherent illogic in the
formula suggested, of 75 cents/75% = $1 value. If
only 50% of the recipients opened the mail, then the
calculation becomes 75/.50 or a value of $1.50. In
other words, this would dictate that the less often
a direct mail piece gets opened, the more valuable
it is: a confusion of cost and value. ModemMedia's
formula makes the weaker advertising more valuable.
To take the logic to its extreme. In a mailing of
75,000 pieces, if only one was opened, that one has
a value of $5.6 billion dollars. Yet if one less than
that is opened, clearly the total mailing has a value
of $0. By the way, direct mail advertisers typically
track response, which may be 5%, rather than "openings."
is meant to suggest is that using this arbitrary direct
mail valuation has no relevance to the web site ad.
The value of direct mail is sales generated per piece,
it is suggested in the model, that an estimate of
20% of those reached by the billboard ad will click
on the link and enter the advertisers website. Therefore,
the above $1 cost per opening is applied to the estimated
20% of 10,000 reached who will "click", for a total
of $2000. This $2000 is added to $700 for the 10,000
reached by the clickable billboard at a $70 magazine
CPM, plus one-third of the repeat links to the home
page (.333 x 10,000 x 4) for $930 for a total price
of $3630, for an ad with an estimated 2000 readers,
or a CPM of $1815! Or, to be most fair, $1630 being
charged for the 10,000 "reach," creates a $163 CPM.
If you accept the discounted 40,000 return impressions,
which of course shouldn't be counted in a CPM, you
have a $70 CPM for impressions which are most comparable
to outdoor billboard impressions. Which leaves the
$2000 for the 2,000 actual readers of the Web site
for a $1000 CPM.
the Modem Media model seems to over-count impressions,
call them reach, and justify CPMs of $1815 for an
audience whose quality is only assumed. Web ads are
magazine-like, not direct mail-like, unless they generate
orders, which may well make them worth $1815 CPM,
but at least will make it easy to put a value on them.
is in trying to incorporate production cost into media
when the proportions don't work. Internet advertising
agencies need to sell their creative costs separately.
From a media perspective, the ModemMedia model has
moved to the point of rational thinking. All it needs
is to count impressions in CPM calculations in the
same way as other media do and to put values on those
impressions comparable to the media they are most
like. For "billboard" impressions, something between
outdoor and magazine CPMs will probably be acceptable
to the industry, and once per visit to a site is the
fair count of impressions in those CPMs. If clicks
are sales as in true direct marketing, then another
model, perhaps commision based, may become appropriate.
is a veteran of 25 years in advertising. At industry-leading
firms like Saatchi & Saatchi, Vitt Media International,
Foote Cone & Belding, and Strategy Research he has
been a Media Director, Media Research Director, and
Ma rket Research Director. He operates the Market Segmentation Resource Locator.