Comparing Offline With Online Advertising

Marketers pay an average of 54c per click for Google Ads, according to Majestic Research.  The ad rate in the New York Times is around $1,000 per column inch, according to their rate card.  Which is better value?

There are always more opportunities than your budget will cover.   If you’re spending on both, how can you compare the returns?
The secret is to find a way of treating them as the same thing. 

The price for print advertising is based on two things – circulation, and the amount of space you buy.  The price for broadcast (TV and radio) advertising is based on the number of people listening, and the length of the ad. 

Google Ads are PPC, or Price per Click - you pay when someone clicks on your ad.   You can also buy CPM, or Cost per iMpression in which you pay every time your ad is shown (an “impression”).  CPM is most common with online magazines because people coming from the print industry understand CPM, it’s what they’ve been selling in print – a portion of a page (or screen) presented to a given number of people.

These models may look very different, yet they can be compared by looking at their response rate. 
The secret is to ignore the differences in how they work and focus on the bottom line.  What matters how many sales you get at the end of any marketing processes, and how much each sale cost to acquire.  Irrespective of source, what matters is the final “customer acquisition cost”.
In other words, you can compare different advertising outlets by working out their CPA (Cost Per Acquisition). 
Let’s say you are spending the 54c per visitor in Google. If your website’s sales performance is average you have a conversion rate of 2%.  This means you acquire 1 visitor in 50.  In this case your CPA from Google is 50 times 54c, or $27.00. 

Meanwhile you take out a quarter-page ad in the New York Times, at $10,000, seen by 2 million people.  You get a response rate of 1 per 5,000, which means you get 400 telephone calls. Your sales team converts 25% of those into sales, so you get 100 sales for $10,000.  This means your CPA is $100.  Therefore your New York Times ad is four times more expensive than your Google Ad.

Print is always more expensive than PPC, and broadcast even more so.  However, what this form of analysis can’t measure is brand awareness.  There is good evidence to suggest that brand awareness cannot be developed through web advertising, whereas most TV is about brand awareness. 

Consider the nature of the customer experience at the time of ad presentation.  Offline media advertising involves presenting an ad to someone when they are doing something else.  Search advertising presents an ad to someone at the moment they are looking for that product.  So you can’t compare these if you’re trying to develop brand awareness, only if you’re trying to directly generate responses.  Similarly, search advertising is hopeless when it comes to launching new product categories.  People have to know something exists before they will look for it on the web.  In order to compare offline and online channels, they need to have the same aim.

It’s dangerous to compare other parts of the sales process, such as initial response rates.  How many people picked up the telephone in response to a flyer versus how many people clicked on the Google Ad?  However, this is deceptive because the sales performance of a web site is appalling compared to telephone sales.  A telephone sales person can respond to the prospect’s objections as they occur, can anticipate, react to tone of voice, and so forth.  All a website can do is present pre-designed text and hope for the best.  Thus each telephone sales pitch is unique to each prospect, whereas the website says the same thing to everyone.  The reason why both sales channels are comparable is that, though the success rates for telesales is much higher than the website, the cost of getting someone into the telesales channel is also much greater.

Making such comparisons requires that you can gather the data accurately.  This requires you have structures in place to determine where people came from.  Any print ad will include a website as well as a telephone number.  However, you need to be able to separate site visits generated by print from those generated by online ads.  The easiest way to do this is to have a URL which is used only in your print ads.  Conversely, your website should list your phone number.  However, you need to be able to track telephone calls which started on the website so have a phone number which is only published on your site.  Any calls to that number came from the website.

If you can cross-feed people between the web and telesales, you have the chance to use both together.  The web is best at getting large numbers of qualified prospects at a low price, while the telephone offers the best closure rates.  For many companies the best strategy is to use online advertising to drive large numbers of people into the site at low cost, then close via the telephone.

In the final analysis, it doesn’t matter how you first made contact with the customer.  The important thing is how much it costs to acquire that customer.  You can compare all your advertising outlets, online or offline, by looking at the Cost Per Acquisition.  Once you start looking at each channel on the same basis, you may find that they complement each other, and the best strategy is to play to the strengths of them all.