Marketing Channel Cost Comparison on CPM basis - to reach 1,000 users or impressions. TV vs digital radio vs digital TV vs radio display ads vs search ads direct mail vs tv direct mail vs digital

1. Why Digital Kicks
Traditional Tactics
in Cost Effectiveness
Dr. Augustine Fou
March 16, 2012.
March 16, 2012. 1

2. Offline Tactics WITH per unit costs
Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions
Source: Datalogix 2010
Direct mail: $400 - $487 cost-per-thousand
Catalog: $250 CPM
Circular: $100 CPM
March 16, 2012. 2

3. Offline Tactics with NO unit costs
Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions
Source: Datalogix 2010
Radio: $140 cost-per-thousand
Newspaper: $65 CPM
Primetime TV: $24 - $30 CPM
Cable TV: $10 CPM
March 16, 2012. 3

4. Online Tactics with NO unit costs
Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions
Source: Datalogix 2010
Online (display): $5 - $10 CPM
Online (search): $1 - $3 eCPM
March 16, 2012. 4

5. Comparative Costs
Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions
$500
$450
pay for
$450
$400
mailing
$350 costs pay for
$300
$250
$250
media
$140costs
$200
$150 no mailing or
$100
$50 $30 $15
media costs
$7 $2
$0
Direct Mail Mail Order Drive Time Prime Time Online Online Online
Catalog Radio TV Video Ads Display Search
Offline: w/ Unit Costs Offline: w/o Unit Costs ONLINE: WINNER
March 16, 2012. 5

6. Why Digital is SO Efficient
Digital tactics exclude the cost of distribution and media cost to air ads
Offline: w/ Unit Costs (direct mail, catalog, circular)
• Pay to distribute each unit (e.g. $0.45 per mailpiece)
Offline: w/o Unit Costs (TV, print, radio)
• Pay for media to air the ad
Online
• Pay for cost of impression, pay only for clicks (effective
CPM or eCPM)
March 16, 2012. 6

7. Old Ad Man Joke vs New Reality
“I know I am wasting 50% of my ad
dollars; I just don’t know which half….”
“I know which 99% of my ad dollars I am
wasting; I will only pay for the 1% that
works.”
March 16, 2012. 7

8. Digital is more efficient
Pay for impressions
Pay ONLY
for clicks
… pay only for results.

9. Ad Spending Has Not Caught Up
March 16, 2012. 9

10. Dr. Augustine Fou – Chief Digital Strategist
Dr. Augustine Fou is an industry-recognized thought
leader in digital strategy, search and social media
marketing and former Group Chief Digital Officer of
Omnicom's Healthcare Consultancy Group. Dr. Fou has
over 16 years of management consulting and digital
strategy consulting experience, advising CMOs, marketing
executives, and global brands. He pioneered the
application of the Unified Marketing™ framework to
optimize marketing across both traditional and digital
channels and tactics.
Dr. Fou is also an Adjunct Professor at NYU in the School
for Continuing and Professional Studies and at Rutgers
University at the Center for Management Development,
where he teaches courses on digital strategy, social media
marketing to executives. He is a frequent panelist,
moderator, and keynote speaker.
Dr. Fou completed his PhD at MIT at the age of 23. He
started his career with McKinsey & Company. He writes a
monthly column on Integrated Marketing for ClickZ.com,
and can be found on Twitter.com @acfou.
acfou@mktsci.com 10