Sponsored Content WEBINAR: ELECTION 2008: E-mail Tips from a Political Insider   WEBINAR: Becoming the Illusionist: The Magic of Using "Brand" to Drive Response without Results Disappearing in the Process   WEBINAR: Score and Win Through Cooperation   TOOLS OF THE TRADE: Holiday's are prime-time for email marketing - maximize your ROI by getting to the inbox   ON DEMAND WEBINAR--MASTER CLASS: High Performance Online and Off-line Strategies for Large Scale Customer Acquisition   FREE WHITE PAPER - Direct Mail and the Internet Find any supplier you need - agencies, CRM, fulfillment, lists, e-commerce, paper, printers, telemarketing, and more. Featured Categories Lists and Data Telemarketing Database Marketing E-commerce Web Marketing Agency & Creative Services Print, Production & Paper Lists and Data Processing :: view all categories Get free access to more than 50,000 list data cards - one of the most comprehensive databases in the industry. >> Search Now DIRECT Buzz Blog Webinars Buyer's Guide Calculators JobZone ListFinder Promo Calendar Research Store E-Newsletters Print Magazine This Month in Direct Magazine Deal With It Direct had a full house for this year's list roundtable. Considering all the additional responsibilities on brokers' plates, that's impressive... See Full July Issue

The wide range of payment models used for online advertising often causes a tremendous amount of confusion for advertisers trying to determine their return on investment.

Understanding how to design an advertising program to optimize each online format is the key to hitting your ROI objectives.The first step is to understand how a Web publisher (like Yahoo!, AOL or MSN) thinks. A publisher's goal is to get the most revenue they can from each page displayed. Publishers would prefer to sell their entire inventory at their target effective CPM (cost per thousand views), thereby guaranteeing their profit margin.

Some publishers have begun to realize that they might actually make more money off a CPA (cost per action/acquisition) program if it performed well for the client. This thinking has actually been automated into the bidding model for Google's AdWords. On most cost-per-click (CPC) search engines, the highest bidder gets the top spot, and so on down. With Google's new model, the highest spot goes to the advertiser driving the most revenue for Google. This is determined by a combination of the CPC bid and the clickthrough rate. So if company A bids $1 and Company B bids $1.50, but the ad for Company A gets double the click rate, Company A gets the top spot. Other major publishers are starting to test this concept with run-of-site banners. In this model clients bid for the inventory, with the impressions going to the advertisers generating the highest effective CPM, no matter what format they prefer to pay for it.

For advertisers it's important to get the most value out of a campaign by developing creative to complement the format. If media is purchased on a CPM or fixed-rate basis, the objective is to drive as many visitors as possible to the site. The advertiser has already agreed to pay for the eyeballs, so the creative should be focused on driving maximum traffic. On the opposite side of the spectrum, if media is purchased on a CPC basis, creative that attracts hundreds of thousands clicks but only a handful of sales could be disastrous. The ads need to limit clicks by “pre-qualifying” only the viewers that really want this product and are ready to buy immediately.

ROI objectives must be paramount in the creative team's eyes. Video Professor recently ran a large program across all MSN properties on a CPM basis. Multiple creatives for each banner size being run were tested. The only difference was that the second one had a “click here” button. This minor change resulted in a 237% increase in clicks and a 50% increase in total sales. Having a simple call to action is still vital for banner creative. Many viewers see these banners as part of the page content and do not click on it unless prodded.

Another effective means to drive click rates is to use words like “Free” or “Limited time offer.” Some advertisers run “Today only” ads every day. Another great tool to secure clicks is the “fake” drop-down or form. These drive clicks, but they deliver more sales if you are paying on a CPM basis. (Warning: Never use these tactics for a CPC program unless money is not an object.)

Even when purchasing a program on a cost per action/acquisition basis, creative becomes a vital element in ROI. If your desired result is a credit card purchase, then you want as much traffic as possible. But if it's just for an application, a request for a quote or a free trial, you want to drive only qualified applications. So even with CPA programs (if they are not for a purchase), the creative must be customized. As with a CPC program in which a company only wants to pay for high-quality visitors, it only wants to pay for high-quality actions for a non-purchase CPA as well. The higher the pre-screening of the viewer filling out the application, the higher the conversion to a paying customer down the road.

Another important consideration for any campaign no matter how it's purchased is the ability to convert quickly. Once a potential customer has been attracted to a Web site, the advertiser needs to work fast. If the site doesn't gain the potential customer's interest in just a few seconds, they'll be on to the next site. The site needs to be attractive, professional and easy to navigate. Key information must be clearly displayed on the landing page. Also, if a particular keyword is advertised, don't send the viewer to the front page, where they will need to make another click to find what they want. If they have already been pre-screened through their search query or your creative presentation, get them to the product or solution fast. There is about a 25 percent drop in conversions with every extra click someone is forced to do. If an application needs to be filled out, send them to a page that has the form right there. Additional sales and information copy can be added to the page, but do not make them click too many times!

Ron Ossip is senior vice president of marketing at 411web in Los Angeles.