Advertiser Case Study

1. An advertiser wants a combination of increases in sales, leads, and brand awareness. The best metric for measuring sales is their Return on Investment (ROI). For an advertiser such CTR and impressions also help to increase leads by showing advertisers who their repeat and potential buyers are. They also help identify how effective a campaign is at attracting the proper market. Similarly, if a company were to implement a new campaign then they could use CTR to track any changes in market share. Brand awareness can be difficult to measure but advertisers can use the CTR and page impression metrics to help in market analysis and market research of brand equity. These two metrics can be applied to show how well the product is exposed to the public and, consequently, to a consumer's subconscious. Although page impressions do not provide solid values for measuring brand awareness, they can be an important factor in increasing brand awareness and long-term customer base. Financial ratios can also be used since brand awareness is deeply linked with impressions of a visitor/customer.

2. The main consumer behavior that determines a successful business model is a high conversion rate through repeat purchasing. To accomplish this, an advertiser must connect with their customers and develop long term relationships in order to have solid customer retention. In addition, delivering value is key in building brand awareness and customer commitment. Successful business models don't only focus on high and steady sales but also on high brand loyalty and awareness. Businesses succeed from supportive word of mouth and market leadership. Thus, positive consumer interactions are of import when rating a business model; as such, an advertiser or marketer should focus decision making (when, how, what, why) on the customers' needs.

When adopting this fact to the online environment, a successful business model relies on more customer click-throughs and page-views. Measuring these, an advertiser can focus on how to go about generating new customers. This is a common goal to brand awareness but insufficient if not accompanied with credible processes, programs and performances as suggested by ‘The Four P's of Modern Marketing Management'. While developing a customer behavioral breakdown analysis (p.83, Fig.3), companies can figure out their strength in certain layers and reinforce the ones they're weak in. These are all methods a company can apply to their business model to achieve the most important result of positive consumer behavior: a high conversion rate due to brand awareness, loyalty, and high amounts of repeat buyers.

3. Heather Yates' mathematical analysis described in the case will definitely be useful in justifying why MedNet should be allowed to charge Windham for CPM as well as CTR. When converting $100 CPM to Cost per click through, Mednet agrees that it is $3.33, significantly higher than Marvel's $0.54. However, when factoring the actual purchase rate into account (6% at Mednet, and 2% at Marvel), MedNet's Cost per purchase is only $55.55 per purchase, while Marvel's Cost per purchase is $27 per purchase (Table 1). MedNet charges this premium because advertising on Mednet produces 7,740 purchases per month, 2,420 more than Marvel's 5,320 purchases per month (Table 2).

Furthermore, MedNet's customer tended "to buy more products from advertiser when they did decide to purchase." (page 4). The average profit contribution per sale for Heart Medication at MedNet (Health care website) is $150, while at Marvel (Search Engine) $45 (Exhibit 4).

Combining all previous factors together, we are able to show that while Windham spends $430,000 each month for Vesselia on advertising with Mednet, $286,360 more than with Marvel, the ROI with Mednet is 270%, while the ROI with Marvel is only 166.67% (Table 3).

Additionally, MedNet provides another benefit to Windham because of its reputation as a database of trusted medical knowledge that is easy for viewers to understand. Visitors of MedNet increase leads and spread brand awareness for Windham; that is, visitors of MedNet are more serious consumers that have a specific medical need. Heather knows that this target audience is who Windham wants to reach. Click throughs do not prove how viable an advertisement might be or how close it would lead to sales. Assuming a browser was to click through a Vesselia advertisement but did not purchase or print a coupon, they were still likely to request a prescription from their doctor (page 4). Charging for page impressions allows MedNet to earn money based on these sales that Windham makes. By applying this assumption model to MedNet's competition, Yates can justify that visitors searching ‘Heart Medication' on Marvel or Cholesterol.com are likely to have visited MedNet for initial broad information and have seen a Vesselia ad. Yates and Windham should research how ads on MedNet play a non-monetary role in improving Windham's other advertising needs.

Alternatives to charging for impressions could be charging for endorsement. Because MedNet's board has physicians, visitors would trust MedNet and their support for Vesselia thus increasing brand awareness, leads, and Windham's reputation. Another alternative could be to create an account system within MedNet where customers who choose to provide private health information (40% of visitors according to survey). With the information that MedNet gathers from these visitors, they can market Vesselia directly to those who would find it of interest. This would justify charging for CPM or at a premium.

Table 1: Advertising Cost per Purchase

Cost

Cost/Click-Thru

Purchase Rate

Cost/Purchase

MedNet

$100 CPM

$3.33

6.0%

$55.56

Marvel

$0.54/CT

$0.54

2.0%

$27.00

Cost/Purchase = Cost/Click-Thru / Purchase Rate

Table 2: Monthly Purchase Volume

Monthly Visitors

Click-Thru Rate

Click-Thru

Purchase Rate

Purchase

MedNet

4,300,000

3.0%

129,000

6.0%

7,740

Marvel