The deal with AOL is great...but only if CPQ chooses to make it great. Here's why:
From the standpoint of advertising, the web has been badly managed by virtually everyone who advertises there. The AOL deal is as much about advertising as it is about AOL purchasing goods.
IF CPQ puts 1/10th of the effort into advertising on AOL as they put into TV/Radio, their eventual payoff will outstrip other media. Reason: cost of performance. TV doesn't have the feedback loop that online does, and online is generally cheap. It can cost over $100k plus to create a TV ad (closer to $500k per ad), versus building 1,000 online ads for about $50k. The cost of advertising online, when you create the feedback loop, is higher on AOL than elsewhere, but is still reasonable vis-a-vis TV. A $1 cost per click will pretty much result in a $15-20 cost per acquisition.
This doesn't count the power of additional branding, and purchases that are made "post banner viewing" (a purchase made after seeing a banner but not clicking on it)
Given the low cost of banner development, the low cost of the feedback loop (yes, a db that does that is inexpensive insomuch as it can be amortized over the life of the db), and the now competitive with TV prices online....Compaq has the opportunity to light a fire, should they choose to.
Even if they don't, it's still a great deal for them. I'd just like to see somebody do something right online for once. |
