Recent developments in online ad technology have made B2B display advertising more affordable and easier to manage. Today more companies can do it than ever before.
But does that mean your company can afford to do it?
This article helps answer that question. It lists your likely costs and offers tips for controlling them.
Expect Costs in Three Categories
When you begin B2B online display advertising, you will spend money in three areas:
- Fees for an ad technology platform. This is a monthly or annual fixed cost. You pay a subscription fee.
- Fees for media buys. These are variable costs. The amount you pay depends on how many ads you buy, which accounts and individuals you target, and how many impressions you want.
- Fees for creative and other purchased services. These are also variable costs. You will need creative and production services to generate your ads. You may also choose to buy optional premium services such as ad verification.
Let’s look at each category in more detail.
You Pay a Monthly Subscription Fee for an Ad Technology Platform
Today you have a choice of a small number of ad technology platforms. At the time of this writing, subscription fees for B2B ad tech platforms and rates appear to be structured similarly.
But there are important differences in what you get for your money. Some platforms offer cookie-based targeting, others IP-based targeting. Few offer both. For information about the differences, go here.
Competition and other factors may change pricing in the future, so seek current information before making a decision.
The Kwanzoo ad technology platform charges a base subscription fee that starts at about $2,000 a month. Your subscription fee for the platform increases as you add more targeted accounts or geographies. It also increases as your run more ABM programs.
Your ad tech platform may charge a minimum subscription fee. Kwanzoo expects new clients to commit to a subscription of at least six months.
Media Costs Vary with the Number of Ads You Place and Where You Place Them
For most advertisers, media buys are likely to be the biggest expense of online display advertising.
With display advertising, you normally pay a cost per thousand impressions (abbreviated as CPM). Each time a web publisher serves your ad to a person who visits their site, they count it as one impression.
CPMs vary somewhat from one publisher to another. They also vary from one ad network to another.
The CPM typically increases with the “quality” of the publisher’s ad venue, the demographic or occupational profile of people who visit the site, and more visible placement of your ad on the web page.
Your Choice of Ad Platform Also Affects Your Total Cost
CPMs also vary from one ad platform to another. In fact, CPMs offer an effective way to compare the economics of using various ad platforms.
If you can, take one of your ad campaigns to each of several ad platforms. Ask each provider to project your CPM for running your ad through their platform.
Your will see that your CPM can vary greatly for the same campaign run through different platforms. The differences in CPMs can dramatically affect your total advertising cost.
If you do your homework and compare ad platforms, you can save a lot of money. Or you’ll achieve better results for the same money.
Your Ad Platform May Charge a Premium on Media Buys
Ad agencies typically charge commissions for media you buy through them. Agency commission rates are usually about 15%. You pay this fee on top of the cost of your media buys.
With B2B digital display ads, some ad tech platforms may also charge commissions, premiums, or markups on media you buy through them.
It’s important to know whether you will pay such upcharges. The cost adds up fast.
So check with a few platform service providers before you choose one.
For any premium they expect you to pay, ask yourself whether they add enough value to offset your higher cost.
Costs for Creative and Production Services Vary Widely
An earlier article in this series described three alternative ways to produce your ads. You can:
- Do the creative and production work in house.
- Have Kwanzoo get the work done for you.
- Hire the services of digital agencies or freelancers.
The cost of creative and production services varies considerably as you move from one alternative to the next.
Doing the work in house is probably your lowest-cost alternative. It can be a great choice if your team has the right skills and the capacity to do the work.
Hiring freelancers may be more expensive than doing the work in house. But with freelancers, you don’t have the fixed overhead of staff salaries and benefits, office space, equipment, and so on.
When you buy services from freelancers, you may have to act as a kind of general contractor to coordinate the work of several different specialists: copywriters, scriptwriters, designers, animators, sound designers, voice talent, etc.
Expect to Pay Higher Prices at Agencies
If you buy creative services from a top digital agency in a big city, expect to pay considerably more than you would for freelancers.
At a big agency, you may find more knowledgeable and experienced staff. But you don’t always get the high caliber you may think you’re paying for.
High agency fees help cover high fixed operating costs. Maybe the agency has nice offices in expensive locations, generous customer entertainment budgets, and so on.
You’re smart to question what value you get for your money.
‘Fancier’ Ads Cost More
Whoever you choose to source your creative and production services, your cost will also vary with the sophistication and complexity of your ads.
If you run standard-format display ads with static JPEG images, your creative and production costs will be lower than for ads containing video, audio, or HTML5 code.
In another article in this series, we noted that most Kwanzoo clients prefer running simpler ads. This is true for B2B display ads in general.
Business-to-consumer (B2C) ads for national and global brands are more likely to be toward the more elaborate and expensive end of the spectrum.
You May Also Incur Fees for Ad Verification Services
Ad verification services offer four added services that many advertisers value:
- They monitor ad venues for authenticity.
- They help protect against advertising fraud.
- They help ensure that ad venues are safe for your brand.
- They help ensure the viewability of ads.
In brief, these optional services help ensure that your ads appear in authentic (not fake) ad venues. They help ensure that the venues provide what you consider to be a safe context and environment for your brand.
These services can also help ensure that your ads are actually shown at the times you pay for. Finally, they help ensure that your ads are viewable (without some technical glitch) when they appear online.
If Kwanzoo is your ad tech platform, they can add the fees for such services to your base subscription fee. The cost will appear as a separate line item on your spending report.
Expect ad verification services to add 5% to 12% to your base media fees, depending on your ad volume. Your ad verification service may charge minimum monthly or quarterly fees.
How Much You’ll Pay in Total
So what is your total ballpark cost, all in?
Kwanzoo suggests that you plan to spend at least $25,000 per fiscal quarter. That averages about $8,300 a month.
This is a reasonable starting budget, says Mani Iyer, CEO and founder of Kwanzoo.
Kwanzoo provides a predictive account coverage report and an ABM budget modeling service. Both services are free.
Between the two, you’ll see in advance how effectively you can reach your targeted accounts and contacts. You can also set global and regional ad budgets based on your revenue goals.
Average Spending Varies Widely
How much do Kwanzoo’s clients typically spend?
The amount varies from about $25,000 to $170,000 per quarter, Iyer says.
The trend has been steadily up. Kwanzoo sees fewer new clients at the level of $25,000 per quarter. More are in the range of $40,000 to $70,000, Iyer says.
“As we work with larger agencies, we think spending will continue to rise,” he notes. “We are starting to see clients with budgets of $200,000 to $300,000 per quarter.”
No Surprise: Bigger Companies Spend More
What kinds of companies spend at these levels?
“Most of our clients range from mid-sized companies to large enterprises,” Iyer says. “They typically have annual revenue of more than $50 million.”
“We also have a handful of smaller clients. They tend to be Series B startups. Maybe they’ve recently received $8 million or $10 million in funding.”
I hope this post has helped you decide whether your company canafford to spend at the levels needed for online display advertising.
A pertinent next question is whether you can afford not to spend more money on digital display advertising.
For answers to that and related questions, look for future articles that address these topics:
- Measuring the effectiveness of online display ads
- Setting expectations for return on investment
- Testing and optimizing your ads.
Don’t miss any of these upcoming articles. Share your name and email address. We’ll notify you as future articles appear.
If you have other questions about getting started with B2B online display advertising, look for other articles in this series. Here are the links:
About Dave Vranicar
Dave is founder of Redwell B2B, a company that provides consulting, coaching, and content-creation services at the intersection of Sales and Marketing. Redwell’s goal is to help business-to-business companies accelerate revenue growth by helping Sales and Marketing work together as members of the same agile revenue team. Most of Redwell’s clients are tech firms that engage in complex sales involving multiple decision influencers. Content created by Redwell supports both inbound and outbound prospecting, including social selling and account-based marketing and sales development.