Interactive+Ads+Pros+&+Cons

=Interactive Ads: The Pros and the Cons=



What are Interactive Ads?
Interactive advertising refers to promotional techniques that include an element of feedback from those to whom the advertisements are directed. This feedback gives the advertiser analytical data that can be used to improve the advertising methods being employed. Interactive advertising is usually used to refer to online advertising, but can also be applied to offline advertising methods such as consumer surveys.[[|1]]

Pros:
I figured, based on the $1 billion valuation of Twitter, each user was worth about $38 to the company right now, and the acquisition cost per user (minus turnover) is around $4 to $10 per user. In the case of Groupon, for example, it has spent tens of millions of dollars per quarter to acquire users via performance-based marketing, especially when it wanted to be sold, raise money, or go public.[[|2]]
 * The value per user is often ridiculous, pushing more and more companies with cash to try acquiring new users.**

That's always good when investments are made online, as there is more money to be used in advertising.[[|3]]
 * It brings more money into the virtual economy.**

Nothing interests an agency more than articles touting the value of specific media properties. Whenever someone talks about a specific property in the media, especially mainstream media, advertisers flock to try new things. Facebook has become a dream for the advertising community, partially because of the enormous press given to it.[[|4]]
 * Huge valuations raise advertiser interest.**

Cons:
When media properties with millions of visitors have huge valuations but the advertising is selling at sub $1.00 CPMs, it often dilutes the value of advertising completely. While we'd like to think that media buyers are smart, we all know that they often just want the lowest price and don't really think beyond the box. Anyone remember when MySpace was selling inventory at 10 cents CPM right after it was sold?[[|5]]
 * It dilutes the value of advertising.**

For some reason, interactive advertising companies are being ignored value-wise in comparison to other "hot topic"-based websites.[[|6]]
 * It ignores interactive advertising companies as investments.**


 * It ignores revenue as a metric for value.** Which is mainly based on advertising. Unless you are selling a product or subscription, the main way media properties have made money traditionally is by interactive advertising. Frankly, the valuations of properties on the Internet should be made by the revenue they are bringing in, not how many visitors they have, or how many times Michael Arrington says their name.[[|7]]

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