Online Marketing Is Painful For Local Advertisers

Cost-per-click (CPC) advertising is the lifeblood of our business. We recently began testing CPC advertising across a variety of search engines and ad networks, and we immediately noticed a lower quality of traffic as compared to Google and Yahoo. Specifically, landing page bounce rates are considerably worse on ad networks and low-tier search engines.

With any acquisition source, bounce rates serve as a great measurement of traffic quality, or the ability to accurately geo-target consumers. If a high percentage of consumers hits the back button immediately upon reaching our landing page, it indicates we’re attracting (and paying for) consumers who didn’t intend to see our offering. More importantly, a higher bounce rate means fewer clicks have the opportunity to convert on page two, which diminishes the revenue opportunity.

For clicks that don’t abandon our landing page, conversion rates on page two are comparable across all sources (SEM, SEO, display, e-mail, affiliates). This means the value of a consumer who reaches page two of our conversion funnel is equal across all sources (we use “net clicks” to define traffic that moves to page two). Net clicks are important to measure because the cost of a net click accounts for abandonment rates and allows for a fair cost comparison across all traffic sources. The data below shows how gross CPC and abandonment rates factor into the cost of a net click.

Ask.com is one of the search engines we recently began testing. As compared to the bigger search engines, our bounce rates with Ask.com are considerably higher, but the gross CPC is lower, causing the cost-per-net-click to be equal. In this case, high abandonment rates are tolerable because the gross CPC is low enough to offset the influx of abandoned clicks.

We’re also exploring AOL, Miva, 7search, ADSDAQ, MarchEx, Right Media, Value Click, Quigo, Avenue A, and a suite of ad networks offering CPC advertising. Abandonment rates are high across most of these sources, but only some of the sources offer a CPC low enough to meet our cost-per-net-click targets. For the most part, the revenue opportunity across these sources isn’t high enough to justify the cost of account management, bid management, and analytics tracking.

High abandonment rates, coupled with the inability to accurately geo-target, makes spending profitably on ad networks and low-tier search engines nearly impossible for small and local advertisers. Some of the sources work for us because we can buy nationwide traffic, we’ve invested heavily in landing page optimization, and we have a team dedicated to evaluating new media sources and managing the accounts. Most companies cannot invest this depth of resources, causing them to miss out on a significant volume of traffic across a unique blend of web properties.

We provide online marketing services to small and local advertisers, and we recently began selling geo-targeted net clicks to our clients. A net click that is geo-targeted is called an “Enhanced Click,” and Enhanced Clicks convert better for our clients than their traditional traffic sources. By eating the abandonment traffic and delivering clicks in precise geographic locations, we allow local advertisers to reach consumers across a span of web properties that have historically been too cost-prohibitive to manage.

Buying Enhanced Clicks avoids the costs of SEM account management, and it ensures an even quality of traffic, regardless of advertising source. We’ve seen almost no attrition across buyers of Enhanced Clicks since we began testing, and we’re confident this quality of traffic can’t be beaten. This offering is currently available for car dealers (new cars) and real estate agents (home buyers, home sellers), and we’ll be offering Enhanced Clicks for a variety of new verticals in 2009. Visit the Reply.com home page for more information about the Reply! Click Marketplace.

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