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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:tomateborcom [dot] com]
> Reply To: uk-netmarketingatchinwag [dot] com
> Sent: Wednesday, March 04, 1998 8:16 PM
> To: uk-netmarketingatchinwag [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
>impression is worth X, then buyers will pay anything less than

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.

>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 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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