Repeat Business Generates Half of Web Advertising Value

Online marketers need to track repeat business in order to quantify the true return from online ad campaigns, according to the findings of the third quarter Online Advertising Report (OAR) from AdKnowledge.

“Last quarter’s OAR demonstrated that click rates are no longer an effective tool to optimize online campaigns,” said Steve Findley, VP of AdKnowledge eAnalytics™ data mining and analysis firm. “This quarter’s OAR numbers show the importance of capturing repeat visit information to help determine the true value of a campaign.”

By tracking several campaigns over the past few months, AdKnowledge discovered that, within 90 days of showing an ad, fully 48.6 percent of the sales leads generated by a campaign came from repeat visits above and beyond the initial visit and conversion event.

“For sophisticated online marketers today, it is important to calculate the full return from an online campaign, which means capturing repeat visits as well as the brand impact of the advertising, not just clicks and post-click events,” Findley said. “Once they have the complete picture, marketers can then measure the lifetime value of customers and optimize their campaigns more effectively.”

Web Ad CPMs
June 99 $34.23
July 99 $34.20
August 1999 $34.03
September 1999 $33.96
Source: AdKnowledge OAR

According to the OAR, the number of advertising-supported sites and networks continues to experience rapid growth. During the third quarter, the number of sites and networks grew by 449 to 2,560, an increase of 21 percent. In particular, shopping and travel sites saw dramatic growth. E-commerce-related sites are surpassing sites with traditional content, such as radio, TV, and episodic sites.

“The only site types that experienced declines were those with retrofitted content, like TV and radio sites,” Findley said. “This signals a maturing of the content on the Web.”

The report also found that CPM rates have been flat, despite the dramatic growth in the supply of ad space. For the third quarter of 1999, CPMs declined less than 1 percent over the previous quarter. When compared to the second quarter decline rate of 2.1 percent, this indicates an even more significant leveling off of CPM rates.

“This reflects heightened demand for online advertising coupled with strong growth in online ad spending,” Findley said.

Corporate, computer and technology, and professional sites still demand the highest CPMs on the Web, according to the OAR. As far as creative is concerned, one change noted in the AdKnowledge report was the increase in the use of sponsorships and 88×31 buttons.

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