uk-netmarketing Archive
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Subject: | RE: UKNM: Advertising might actually be dead |
From: | James Tarin |
Date: | Thu, 5 Mar 1998 19:55:36 GMT |
> ----------
> From: Tom Hukins[SMTP:tomeborcom [dot] com]
> Reply To: uk-netmarketingchinwag [dot] com
> Sent: Wednesday, March 04, 1998 8:16 PM
> To: uk-netmarketingchinwag [dot] com
> Subject: Re: UKNM: Advertising might actually be dead
>
> Tom Hukins wrote:
>
>How do we value banners? The answer to this is simple: buyers
will be
>willing to pay anything less than their cost per objective. If
an
>impression is worth X, then buyers will pay anything less than
X.
mmm..... I cannot believe that this is correct. As an advertiser, I am
not only interested in the fact that my marginal revenue exceeds my
marginal costs. Surely I am acutely aware of the fact that I am working
in a competitive environment, and I have to pay less than my competitors
for achieving the same objective if I want to gain a commercial
advantage over them in this context. Additionally, although the above
statement is fine in the theoretical situation where I have no
constraints on my budget, I am generally working in a capitally rationed
situation and am trying to achieve maximum results for my available
budget, not just results whose value exceeds my expenditure.
><Sellers
>will be willing to accept anything more than the cost of
hosting the
>banners. Ideally they will sell at a price which makes them a
profit, but
>if this isn't possible they'll sell at the highest price,
provided that
>price is less than the cost of hosting the advert.
Similarly, I am not so sure of this as a viable business model. In a
situation where I have capacity, my marginal cost of hosting the banner
is zero. However, if I sell my banners at prices which do not make me a
profit, I am conducting a non-viable business model (unless of course I
am hoping to build market share and then gain my revenue stream from
somewhere else (e.g. Microsoft Internet Explorer))
james
> -------------------------------------------
> James Tarin
> Director of Strategy
> Clarity Communications Ltd
> 1 Long Lane
> London EC1A 9HA
>
> Voice: +44 171 397 2900
> Fax: +44 171 397 2937
>
>
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