Putting Banners and Email Together

In the previous article in this Email Marketing Optimization column, Randy Wootton encouraged marketers to consider an approach that uses both banner advertisements and email messages to acquire customers at a lower cost per lead. Extending that focus, this article discusses a media-integration strategy that will not just lower cost per acquisition, but will help maintain a low cost per sale as well.

Given the cost-conscious environment in which most marketers are operating today, it is important to look for new cash-sensitive strategies to acquire customers and lower the cost per sale. While there are cost-effective ways to deploy standalone banner and third-party email-list marketing campaigns to acquire new customers, marketers can achieve lower customer-acquisition and customer-conversion costs by leveraging the strength of each of these media.

Matching Strength With Strength

Assume you are a retailer selling high-consideration items via your Web site. Your goal is to cast a wide-enough net to capture interested prospects and eventually generate sales. Banners used alone can be effective at generating traffic, but because of their limited size and need for an immediate response, they are not always effective at convincing your audience to purchase at that moment. Third-party email lists have also been used as a way to reach prospects with information-rich messages, but the lists are generally expensive and don’t give you a cost-effective way to contact the audience again in the future.

Rather than relying solely on banner advertisements and third-party email lists to acquire new customers, you can put into play a strategy that integrates the strengths of both banners and retention email marketing: using promotional incentives in banner ads as a low-cost mechanism for luring prospects to an opt-in page, and using subsequent email campaigns to offer greater product details and loyalty programs to close the deal and generate a long-term relationship.

When you’re attempting to reach a broad audience with a message, banners are much less expensive than third-party email lists. According to AdRelevance/Jupiter Media Metrix, the average banner cost per thousand impressions (CPM) is $28, while the average third-party email-list CPM hovers around $210.

Rather than using a banner advertisement to elicit an immediate purchase, develop promotional incentives that encourage the audience to click the banner to visit your Web site and opt in to receive an email message or two related to a category or product of interest. Once the email addresses and interest categories are captured, the information can be used to deliver more effective and targeted offers to the individuals.

Costing It Out

If you paid a CPM of $10 and the banner prompted 0.05 percent of the audience to opt in to receive your email messages, the cost per customer acquisition would be $20. If you used email to follow up with each of those customers at an average cost of $0.02 per email and 0.29 percent of the audience purchased your product, you’d have a cost per sale of $7 for email. This would result in an initial cost per sale of $27, but an ongoing cost per sale of $7 for the opt-in email subscribers. See the graphic below for the full analysis.

This low $27 cost-per-sale figure is in contrast with the $100 cost-per-sale figure of a standalone banner-advertising campaign that attempted to elicit a purchase of a high-end product directly from the banner. Such a strategy would result in a lower overall conversion rate and, therefore, a higher cost per sale.

Meanwhile, a strategy that relied solely on third-party email lists to generate sales would result in a very high $180 cost per sale.

Click here for the graphic.

By leveraging the strengths of banner advertising, third-party email lists, and retention email marketing together in a single integrated campaign, one can lower the investment needed to acquire customers and lower the cost per sale — and save valuable cash in the process.

Related reading