Advertising is 155 billion business in the USA. Of that 155B, 85B is Digital and 70B is TV(digital platforms are invest ing in video to capture the TV spend. This post captures my understanding of that world.
- Why Advertise
- Useful terms
- Entities
- Metrics
- Ad Products
- Case study monetizing SnapChat
- Other concept
- How much can a creator make
Why Advertise
What is a brand?
A brand is the way a company, organization, or individual is perceived by those who experience it. More than simply a name, term, design, or symbol, a brand is the recognizable feeling a product or business evokes. Copied from here
Brands, then, live in the mind. They live in the minds of everyone who experiences them: employees, investors, the media, and, perhaps most importantly, customers.
Simply put, brands are perceptions.
The bottleneck for someone using your brand
At the end of the day, many products and brands are fungible, solving an identical customer need, modulo, competing for the same dollar. To pick which brand gets to solve the product (and be paid), the customer needs to think of your brand (discovery), and believe your brand is best.
Advertising both of these.
How much should a brand spend Customer Acquisition Cost (CAC) and Customer Life Time Value (CLTV)
Once a customer is subscribed to something, they likely won’t switch. This means you can compute the CLTV of a customer and so long as the CAC is greater then CLTV, it’s worth spending.
How much do companies spend
Ad spending is high. Some US examples of top advertisers
| Brand | Spend |
|---|---|
| 10B | |
| Comcast | 5.75B |
| Amazon | 3.38B |
| General Motors | 3.25B |
https://www.statista.com/statistics/506867/facebook-marketing-spending/
What percent of gross revenue on advertising?
| Industry | Spend |
|---|---|
| Consumer Products | 24% |
| Consumer Services | 15% |
| Tech | 15% |
| Education | 11% |
| Banking | 8% |
Need to do more vetting from balance sheets, but - https://deloitte.wsj.com/cmo/2017/01/24/who-has-the-biggest-marketing-budgets/
How much do ad platforms make?
In 2019
| Company | Value |
|---|---|
| 162B | |
| 71B | |
| Amazon | 14B |
| Youtube | 15B |
https://marketingland.com/youtube-kicked-in-15-billion-as-google-ad-revenues-topped-134-billion-in-2019-275373
Useful terms
Performance and display
Performance Pay for a call to action. The metric is Cost Per Click (CPM). This is direct marketing in Godin terms. video.
Display Pay to show the ads - the metric is CPM (cost per thousand impressions). This is brand Marketing in Godin terms.
Ad Supply
The number of eyeballs that see your site.
Ad inventory
The number of sellable eyeballs. The ad load x ad supply.
Creators generate “Ad Inventory”, and the social media platform “sell” the inventory buy showing Ads (aka, using their Ad Supply)
Retargeting
Following a user, this is when ads chase you across sites.
CPM Cost per thousand views
ECPM Effective CPM
Sometimes the view is below the fold in CPM models. Most sellers use an eCPM metric. With display advertising it can be a bit tricky since how long the item is watched can be hard to measure (e.g. muted auto play).
CPC - Cost per click
ROAS - Return on ads Spend
Sales / campaign price
CTR - Call to action (click) by views
How many people click
Video CTR
Start Video/Impression (doesnt work for auto play)
Evergreen content
Content that's valuable for ever. E.g TV buying guides. The more ever green content is, the longer you can have a revenue stream.
Entities
Data Mining
MCN
Metrics
Ad Products
TV
Video - Preroll, Inline
Sponsored/Branded Experiences
Snapchat Lenses (snap chat)
A lens in a geofenced area
Sponsored in feed
When watching video/TicTo/Stories you get a video that iss sold from a brand,
Case study monetizing SnapChat
No room in the camera
I’m not sure if this accurate, making it up. Snap had a challenge when it started life, because it was a camera company and there was no where to place ad inventory.
Sponsored Lenses where a novel ad product, which they added.
Sponsored Stories where also a novel ad product, which they added.
Other concept
Gorilla Marketing
Guerrilla techniques mostly play on the element of surprise. It sets out to create highly unconventional campaigns that catch people unexpectedly in the course of their day-to-day routines. You’ll see what that looks like in some the examples below.
https://blog.hubspot.com/marketing/guerilla-marketing-examples
Why video
Half of advertising spend is still on TV. Tech companies want to capture that spending on digital advertising.
Key Advertising Terms
Understanding these terms is crucial for navigating the advertising landscape:
Performance vs Display
- Performance Advertising: Pay for action (clicks). Direct marketing approach using Cost Per Click (CPC).
- Display Advertising: Pay for impressions. Brand marketing using CPM (Cost Per Thousand impressions).
CPM and CPC
- CPM: Cost per thousand views/impressions
- eCPM: Effective CPM (accounts for viewability)
- CPC: Cost per click
ROAS and CTR
- ROAS: Return on Ad Spend (Sales ÷ Campaign Price)
- CTR: Click-through rate (Clicks ÷ Impressions)
Ad Inventory and Supply
- Ad Supply: Number of eyeballs on your site
- Ad Inventory: Sellable impressions (ad load × ad supply)
Creators generate ad inventory; platforms sell it by matching with advertisers.
How much can a creator make
This topic has moved to our comprehensive Creator Monetization Guide, which covers all monetization methods, platform strategies, and real earnings data.