Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou

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

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 CPMMarch 16, 2012. 2

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 CPMMarch 16, 2012. 3

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 eCPMMarch 16, 2012. 4

Comparative CostsCost 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: WINNERMarch 16, 2012. 5

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

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

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

Ad Spending Has Not Caught UpMarch 16, 2012. 9

Dr. Augustine Fou – Chief Digital StrategistDr. Augustine Fou is an industry-recognized thoughtleader in digital strategy, search and social mediamarketing and former Group Chief Digital Officer ofOmnicoms Healthcare Consultancy Group. Dr. Fou hasover 16 years of management consulting and digitalstrategy consulting experience, advising CMOs, marketingexecutives, and global brands. He pioneered theapplication of the Unified Marketing™ framework tooptimize marketing across both traditional and digitalchannels and tactics.Dr. Fou is also an Adjunct Professor at NYU in the Schoolfor Continuing and Professional Studies and at RutgersUniversity at the Center for Management Development,where he teaches courses on digital strategy, social mediamarketing to executives. He is a frequent panelist,moderator, and keynote speaker.Dr. Fou completed his PhD at MIT at the age of 23. Hestarted his career with McKinsey & Company. He writes amonthly column on Integrated Marketing for ClickZ.com,and can be found on Twitter.com @acfou.acfou@mktsci.com 10

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Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou

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