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AM: Summary of Ad/Store Rates

To:     ad-market@netpreneur.org
Subject:     AM: Summary of Ad/Store Rates
From:     Aarupertus@aol.com
Date:     Wed, 3 Jun 1998 15:02:35 EDT

Greetings Ad/Marketing Groupies, 

Thanks to everyone who responded to my Ad/Store rates questions.  This truly
is a great group and I appreciate the valuable and thought provoking
responses.  Per Mitch's request, I am posting a summary of the feedback on how
my site, Virtualathlete, which is not live yet, should  approach offering
advertising and store front space.  This is fairly lengthy but I hope it will
be beneficial.  

First, to answer Bob Smith, Jeff MacConnell, Ross Stapelton Gray and others
(and to be less vague), my original goal with Virtualathlete is to be a "one-
stop shop".  In other words, my goal is to provide the best content and
resources under one umbrella to save visitors and members their most precious
commodity of time when training, working, surfing the web, having a life, etc.
As part of that concept, I want to provide an online store so they do not have
to go from retail store to retail store, 800# to 800#, Web site to Web site,
etc., trying to find what they need. As a result, Virtualathlete will be an
online community for a niche market of users where content and resources will
be king rather than just a site filled with little content, FAQs, links and
blinking, peeking, jumping banners ads. 

Second, regarding market research and promotion, I have done a ton of research
over the past several months and have also developed a detailed market
research questionnaire, providing me some very valuable data.   When I
developed the biz plan, I had an idea of what they might want based on what I
wanted, but I needed to make sure my assumptions were correct.  I know that
there is a market for my site, what visitors would want to see on my site,
what would compel them to stay, what they will pay relating to training, what
products they want in the store, and in what format they will pay for those
products. 

As for promotion, over the years as an entrepreneur and sales person I have
become quite good at generating word of mouth advertising, referrals and the
free forms of PR.  Since I do not have an ad budget, I have a detailed plan
for an on the web and off the web campaign using these same means and am
hoping that if I work hard enough, it will pay off.

Now to the summary of responses: 

1. Should I charge a fee of $500 a month to rent storefront property?  

Almost everyone said no.  Renee Clepper, Jill Harrison, Ted Theologis and Bob
Smith  had some good input here:  $500 was  way too high considering the site
is not yet live and I won't be able to justify the cost for a few months. It
would be better to waive the set up and rental fee and offer a 3- six-month
charter membership, commission only plan for the first merchants who sign up.
They would be made aware that there may be a rental fee in the future.  The
benefit to me here is that I can then leverage the charter merchant's presence
to draw in other merchants.  When the returns are quantifiable I could justify
an annual or leasing space fee. 

However, this late breaking email from Terry Pittman, eaves room for debate:
..."I think $500/month is reasonable on a startup basis - but this should 
also depend upon the space occupied, the prominance and visibility of the 
vendor's brand name, Icon, products, etc.  Think shelf space. Once 
traffic grows, the lease for new vendors should be higher - $2500 to 
$5000.  I would always have a minimum monthly payment for "real estate" 
and then an additional commission.  You'll need the minimums to pay the 
bills in the early months before traffic builds."  

Jill mentioned that I could cover the store merchant set up/ design cost
through a barter relationship with a web firm where design is exchanged for
the merchant's product or offer a template.  Having worked at a top web shop,
I am aware of how particular clients can be so I am concerned about an equal
barter balance there.   I might be better off for now having a store template
designed where the logo, company information and products are inserted with
minimal design effort.   


2. Should I charge a CPM (Cost for 1,000 Impressions) of 0.50?

"Are you out of your mind?"  Everyone agreed that it was way too low and were
confused as to where I even got a CPM of 0.50 - erhem - cents.  Me too, so
let's move on.  

I need to align my pricing with what the current market will allow.  It seems
to be all over but Ted mentioned that according to a study, the going rates
for CPM, are: 
low - 19 	average - 30 	 high - 39.  T

Terry also had some mored detailed thoughts on this:
..."The CPM should reflect the quality of the audience you anticipate 
capturing.  Don't know where you read $0.05 CPM, but that is way too low. 
On an impression-based buy the CPM for a targeted audience (which this 
should be - it is afterall a self selecting audience of atheltic apparel 
buyers) should be $25 - $35, at the very least.  

Do try to avoid "click-through" pricing or "per-inquiry" pricing as this 
could net you a fifty-cent CPM, but is not the appropriate model for your
site.  What the advertising buyer is seeking is audience and environment 
and this means an impression-priced buy. Free for the first month is ok, but
I would make the free first month contingent upon a minimum 12 (or at 
least 6) months agreement." 

The reason I want to offer advertising on my site is to benefit the merchants
and drive sales in the store.   Ideally, merchants will pay me a small amount
to have their logo on the site or in the content, outside of the store.  Based
on this thread, a good idea may be to have a contract which states that the
first month will be free with a CPM of 25 - 30 thereafter for 6 months.  Of
course, when NIKE comes along and says they would like to advertise, I may
need to reconsider…

Okay, I think those sums it up.  A few people mentioned sponsorships vs.
advertising.   Can someone please define this and relate if they have any site
experience on it?  Thanks again to all.   

- Amy

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