With the Internet shakeout in full force, it's time to revisit and compare the costs of advertising online and in traditional media. Here's a quick rundown:
Banner Ads: Banner ads, which are now used more often to create a recognizable brand than to prompt a specific action, range from $5 to $50 per 1,000 viewers, depending on how targeted the ad and the site on which it appears. The median rate is currently $25 per 1,000 viewers. Note, however, that these figures represent rate-card prices, the published rates Web sites say they're charging advertising customers. In a buyers' market like the one we have now, Web sites, like other media, often sell ads for less than a rate card shows. Also, note that there is a growing trend among advertisers to pay for Web ads on a per action basis (e.g. every time a viewer clicks on an ad or purchases a service or product; also known as "CPA"--Cost Per Action), rather than on a per impression basis (e.g. every time a viewer visits a site with the ad; also known as "CPM"--Cost Per 1,000 Impressions). Experts predict that Web advertising will eventually be split between impression and action based deals.
Rich Media: With the growth of high speed Internet connections, rich media ads that use animation, sound and streaming video are becoming more popular. The ads, which usually appear in pop-up windows, run between $40 and $50 per 1,000 ads that appear, depending on the quality and demographic of the site's audience. While the click-through rate for these ads (approximately 6%) generally outpaces rates for banner ads (.5%) and traditional direct mail (1% to 3%), many experts attribute this to experimentation and expect the rate to decline once the novelty wears off.
E-mail Ads/Newsletters: The majority of marketers (roughly 61%) use e-mail to retain customers. However, e-mail is also an efficient way to acquire new customers as it costs only a third as much as direct mail. Also, note that creative costs are roughly $1,000 for an e-mail ad campaign versus $20,000 for traditional direct mail. An e-mail in the form of an advertisement ranges from $100 to $200 per 1,000 e-mail addresses targeted, depending on the quality and demographic of the list of addresses. Content sponsored by an advertiser in a newsletter format ranges from $15 to $25 per 1,000 e-mail addresses targeted, depending on the cost to create and develop the e-mail. Jupiter Media Metrix Inc., a New York Internet-research firm, expects e-mail to be a $7.3 billion market by 2005, up from $164 million in 1999.
Sponsorships: Experts are in disagreement about the efficacy of advertisers linking their brands to areas of content on a Web site. Some highlight the opportunity to work closely with the Web publisher to customize a portion of the site. Others argue that sponsored areas invite skepticism about objectivity. A sponsorship per 1,000 viewers ranges from $30 to $75, depending on the exclusivity of the sponsorship. The more exclusive, the higher the cost.
Local TV: A 30-second television commercial on a local station in a top 10 market ranges from $4,000, generally during a movie, to $45,000 for time on one of the highest-rated shows.
Network TV: A 30-second spot in prime time ranges from $80,000 to $600,000, depending on how high a show is rated and the show's genre. The average is $120,000 to $140,000.
Cable TV: A 30-second spot in prime time runs between $5,000 and $8,000, depending on the network.
Radio: Commercials range from $200 to $1,000 for a 60-second spot, depending on criteria such as the time of day and the program's ratings.
Newspapers: A full-page ad in the top 10 markets runs an estimated $120 per 1,000 circulation.
Magazines: Ads in regional editions of national magazines cost an average of about $50 per 1,000 circulation. The average cost of an ad in a local magazine is about $120 per 1,000 circulation.
Direct Mail: The most common forms of direct mail include messages in letter-sized envelopes, which cost $15 to $20 per 1,000 delivered, and single-sheet newspaper inserts like fliers, which cost between $25 and $40 per 1,000 circulation.
Billboards: To place several short-term ads for one to three months on a 14x48 sign along the freeway ranges from $5,000 to $25,000 in top 10 markets.
Sources: Wall Street Journal; Initiative Media North America, a division of Interpublic Group; and Carat Interactive, Inc.