Advertising Rates Up - Response Down

Advertising Rates Up - Response Down

By Troy Laughren

A recent study conducted by TIME magazine shows that advertising rates have at minimum doubled, tripled and even more than quadrupled in cost in the last 5 years, while response rates have plummeted to an average of just 1/10th of what they were just 5 short years ago.

For example, if you once paid $2000 for advertising and got 100 phone calls, each call (lead) cost you $20, now however that same advertisement could cost you $4000 (or more) and attract only 10 calls, each call could cost you a whopping $400 - sound too incredible to believe, only testing and tracking will tell you for sure.

With countless media choices, media-fragmentation, consumer cynicism and advertising desensitization at an all time high, it's no wonder attracting new customers is getting more and more difficult and expensive. There's no doubt customer acquisition costs have gone up significantly, and unfortunately no indicators exist to suggest that advertising rates will be getting better any time soon.

Case in point: Two short years ago I was paying .10 cents per click on google.com, today that same click costs just over $1.50 - 15 times what I paid 2 years ago. The Sunday Tribune increased their advertising rates by 10% over the last couple of years and the Miami star newspaper increased its rates by at least 3% a year for the last 5 years, that's more than 15% (exponentially speaking).

To cast an even darker shadow over increasing advertising rates' consider that readership or viewership of most newspapers, radio stations, magazines, TV stations and so on... has been steadily and dramatically decreasing over this same time period.

The Sunday Herald circulation for example has dropped 16% since 1995, the Orlando Sentinel decreased by 6% in 2005 and according to ABC on May 3, 2005 daily newspaper readership over the last 4 years has decreased by 15%. With an ever increase of TV channels, web sites, blogs, and satellite radio stations coming out, it's no wonder readership or viewership has decreased per medium. With more and more choices, each fragment of the market gets a smaller piece of the pie.