• by Tom Hespos , February 5, 2002

I hear a lot of people giving the same reason for why they don’t advertise online: “Only half a percent of people click on my banner, and I only convert one percent of the clickers, so even at a $5 CPM, it costs me $100 to make a sale.”

Plenty of marketers have tested online advertising and have encountered similar numbers, so they do an abrupt about-face and turn to other accountable media like direct mail or DRTV.

What a lot of these marketers fail to understand is that trying to make someone buy something that amounts to a considered purchase is like trying to hit a moving target. A click on an online ad represents interest on the part of a consumer, but that’s about it. One can’t always expect that an ad clicker is ready to purchase at the time that they click.

That’s why it’s so important to use the ad click as an opportunity to start a relationship. No one can build a business by relying on the 0.005% of people who see their ad and decide to buy the product right there and then. Even folks who are advertising impulse buy items are having a tough time with that one. Marketers who advertise considered purchases don’t have a prayer if they rely on the click-to-buy model.

Rather than attempting to compel the purchase right away at all costs, advertisers should give a variety of choices to a consumer once they’ve indicated that they have interest in the advertised product. Those choices should be geared toward preserving an opportunity to re-market to that individual until either he becomes a customer or he bails out of the relationship. At a minimum, the advertiser should provide a free e-mail newsletter or some other content in exchange for an interested consumer’s e-mail address. The newsletter can cover news within a product category, engage the consumer with content focusing on a lifestyle or leisure interest compatible with the product, or just simply alert the consumer to specials and offers on the product they’re interested in.

Other options for the consumer should address the various modes a consumer might be in when considering the purchase. A page to request a catalog or product literature in the mail is good for folks who are just beginning to consider a purchase. It gives them the opportunity to compare prices and features, and it gives the marketer a postal address (at a minimum) and an opportunity to follow up at a later date.

A marketer might also consider the consumer who is interested in purchasing, but doesn’t have the financial wherewithal at that particular moment. How about offering a way to apply for financing or a layaway plan in exchange for providing the information necessary to perform a credit check? This not only allows advertisers to get a better idea of who is in their target audience, but it also presents an opportunity to re-market with that information.

We know that click-to-buy works for very few products, so we should stop trying to force purchase behavior immediately. Instead, we should treat considered purchases like they need to be treated.

Returning to our click-to-buy model, if $100 nets a sale at a $5 CPM with a 0.5% click rate and a 1.0% conversion rate, then we can drive down the cost per sale by addressing our conversion rate. If we can get 10% to convert over six months by using the click to start a relationship, all of a sudden we’re only paying $10 per sale, which would be acceptable for quite a few marketers.

Online advertisers have learned quite a bit from direct marketers over the past few years. Maybe it’s time for the online advertisers to take a page or two from the relationship marketers as well.