As a business owner, marketing director or anyone who has a say in how your marketing budget is allocated, it is important to understand which channels will yield the highest return and what the end goal is for each marketing channel. Below we are going to look at how search marketing compares with TV and newspaper advertising.
Search Marketing vs. Television Ads
Marketing and advertising have two distinct purposes, building brand awareness and driving conversions. When it comes to building brand awareness, many people mistakenly assume that TV has a greater ability to build brand awareness than Internet advertising. Wrong. A study conducted by the Stanford Graduate School of Business proved it.
According to Professor Wesley R. Hartmann "If you are evaluating brand advertising and have a preconceived notion that television is better, you need to rethink that."
For those of you who are skeptical of his findings, a second study published by the American Marketing Association and conducted by Lebow Business School Associate Professor Michaela Draganska agreed with the findings of Stanford.
Michaela concluded that "Many advertisers are reluctant to shift a large proportion of their advertising budgets to the Internet because they still view television advertising as the main vehicle for building a brand. Using a unique and rich data set comprising 20 campaigns across a variety of industries, this study demonstrates that Internet ads perform on par with television ads on the brand-building metrics that advertisers use and trust."
Based on the results of those studies it is clear that digital advertising channels are as effective as TV when it comes to building brand awareness. Brand building qualities being equal, how do the two stack up on average cost?
Average cost of TV Ads
The cost of TV ads vary greatly based upon your location, target audience and scheduling. According to Nielsen Media Research though, the average cost to reach 1,000 people via TV advertising was $24.76 in 2014. Below you will see a chart mentioning the cost as $7 per 1,000 views so for fairness sake, we will say that TV ranges from $7-$24 per 1,000 views.
Average cost of Internet Marketing
For comparison sake, we are taking the average of AdWords, Linkedin and Facebook ads as noted below. The cost of reaching 1,000 people online ranges from $0.25 and $5. As you can see, the high end of the Internet marketing average is still less than the low end of TV ads.
Did You Know?
According to Zenith Optimedia, a division of Publicis, TV advertising was expected to account for about 40 percent of the $537 billion spent on advertising in 2014. I believe that as more people become aware of the branding power of digital, that number will shrink noticeably.
Search Marketing vs. Newspaper Ads
Of the estimated 537 billion of ad spending in 2014, online marketing was predicted to account for about 25 percent of the total ad spend. In reality, the total spent on advertising was slightly lower than predicted but percentages where pretty accurate. Internet marketing is expected to see an increase in ad spend of about 16 percent while spending on newspaper ads is expected to shrink by 1-2 percent per year, bringing newspapers down to about 13 percent of total ad spend in 2016.
It is no secret that the reason for a growing online presence and a shrinking reliance on newspaper advertising is the cost and effectiveness of the two platforms.
As most of you know, when you pay to advertise in a general newspaper you are reaching a broad and poorly targeted audience. When using search marketing on the other hand, you are reaching those actively searching for what you have to offer. Even if the cost of the two was the same, search marketing would still be a far better investment.
Average Newspaper Costs
The cost to reach around 1,000 people via newspaper is roughly $32 on a national level. On a local level, I have been told that reaching 1,000 people costs around $16. To account for even smaller newspapers, let's broaden the range to $10-$32 per 1,000 views.
Average Search Marketing Costs
As mentioned above, you can expect to spend $0.25 - $5 per 1,000 views online.
In 2014, Brian Carter posted this graph on Moz comparing the average costs to reach 1,000 people.
Even expanding the range as we did above to account for pricing variance by location, you can clearly see that search marketing will get you more exposure at a lower cost. Exposing people to your brand is very important but if you want to drive revenue and keep your brand around for the long haul, you should be looking for conversions as well.
Inbound vs. Outbound Conversion Rates
SEO leads have a 14.6 percent close rate, while outbound leads (such as direct mail or print advertising) have a 1.7 percent close rate. (Source: SEJ)
If the cost of TV, newspapers and search where all the same, the difference in conversion rates is more than enough reason to go with inbound search marketing.
As a business owner it is hard to break old habits. Trying something new and foreign to your business may seem a little scary, but if you take the leap to search marketing, you will be rewarded. Even if you already have a plan in place for 2015, making the change to search could save you a ton of money while driving your profits higher.