The Economics of Online Marketing

Track what fraction of your online customers are new-to-file. If you’re not doing so already, flag these names in your merge/purge to see how they dupe out against your housefile. If your online marketing efforts bring in a satisfactory rate of new customers, and these new customers have solid, repeat purchase rates, you can grow your business more rapidly by granting your online programs a lower efficiency (that is, a higher A/S), which in turn raises your maximum allowable CPC, letting you buy more traffic.

Online advertisers come into the online ad marketplace with their own goals. Some seek to build brand; some want sales growth, others look for profit. Whatever the goal for your company, determine appropriate efficiency targets and track your results carefully.

Alan Rimm-Kaufman, Ph.D., leads the Rimm-Kaufman Group, a service and consulting firm providing search marketing management and Web usability services to leading direct marketers. He can be reached online at www.rimmkaufman.com.