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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 CPM

March 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 CPM
March 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 eCPM


March 16, 2012.                                                       4
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
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 efficient
Pay for impressions




                              Pay ONLY
                              for clicks

             … pay only for results.
Ad Spending Has Not Caught Up




March 16, 2012.                 9
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

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Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou

  • 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