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Online Advertising Channels – Average Cost Per Order

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I just finished reading a great article in Multichannel Merchant (October 2007 issue) titled, “E-conundrum” written by Ken Magill.

In the article, Shop.org’s State of Retailing Online 2007 report was referenced providing the average cost per order for varying online advertising channels. I wasn’t surprised by the results…

The study stated the following:

  • Email: avg. cost per order less than $7.
  • Banner ads: $71.89
  • Paid Search: $26.75
  • Affiliate marketing: $17.47

The article went on to explain how most merchants are not using email to market to their customers even the cost is ridiculously low compared to the other listed channels. I absolutely agree simply based on the results my company generates from using email marketing with our clients’ web businesses.

Interestingly though, the study did not provide the cost per order for search engine optimization which I imagine has be lower than affiliate marketing even if it is outsourced to a third party versus in-house. What surprises me is the expense associated with banner advertising and how it seems like more merchants spend their budgets on banner ads than email marketing to their house lists.

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