Management Decision Problem

Measuring the Effectiveness of Web Advertising

1 .       You head an Internet company called Baby Boomers Online, which features articles of interest to people aged 40 to 60 on subjects such as travel, discount shopping, health, and financial planning and links to Web sites selling related products and services. Your revenue comes from banner ads that other companies place on your Web site for a fee. You would like to generate more revenue by raising your advertising rates. You can do this by increasing the quantity and quality of visitors to your site to justify charging more for ads placed there. One way to measure the success of ads placed on a Web site is by measuring the click-through rate, which is the percentage of ads that Web visitors viewed on a Web page and then clicked on to explore. Software on the computer running your Web site provided the following weekly report.

Web Usage Report for the Week ending February 14, 2003:

Ad Title

Ad Views

Ad Clicks

Click-Through Rate (%)

Soy Foods and Vitamins

321

19

 

Budget Trips Inc.

674

228

 

Budget Books Online

79

5

 

No-Frills Getaways

945

311

 

Computers for Less

118

5

 

Boomer Financial Planners Inc.

63

16

 

  1. Calculate the click-through rate (expressed as a percentage) for each ad by dividing the number of ad clicks by the number of ad views. Ad clicks are the number of times a visitor clicks on a banner ad to access the advertiser's Web site. Ad views are the number of times visitors call up a page with a banner during a specific time period, such as a day or a week. Rank order the ads with the highest click-through rates.
  2. What categories of ads are the most successful at your Web site? Least successful? Using this information, what kinds of companies should you be soliciting as advertisers on your site?
  3. According to industry news sources, more than 27% of the visitors to the Travelocity Web site were 50 or older, as were over 31% of the visitors to Priceline.com, which offers discount airline tickets. How can you use this information to increase click-throughs and revenues at your own Web site?