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Ethical Considerations And Financial Implications Of Internet Advertising Campaigns: A Case Study Of Helios Botanicals

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Ethical Considerations and Financial Implications of Internet Advertising Campaigns: A CaseStudy of Helios Botanicals2‐23Calculate expected costs(LO1) Helios Botanicals develops hybrid tea roses. A relative newcomer tothe field, Helios is looking for innovative ways to advertise its products to potential customers. RoseMayfield, sales manager and avid online shopper, wonders about advertising the company's roses onvarious gardening websites. She has contacted Kimland Media, Inc., an advertising firm specializing inInternet advertising campaigns, to explore some options.After meeting with Rose, Sami Landon, regional sales coordinator, has suggested that Helios use atargeted marketing strategy by placing banner ads on a few gardening websites. Helios would pay for theservice based primarily on the number of ad impressions (the number of times the ads are shown). Usingpast campaigns as a guide, Sami has prepared the following quarterly estimate for Helios.Banner ad development (5 banners per quarter)$5,000Banner ad placement$0.80 per thousand impressionsEstimated ad impressions2,000,000Banner ad click‐throughs$0.02 per click‐throughFrom past experience, KimlandMedia estimates that 10% of all viewers will “click through” the bannerad to Helios's website. Of those viewers who click through, Kimland estimates that 5% will actuallymake a purchase.Requireda.What is the expected total cost per quarter of Helios's Internet advertising campaign?b.Given Sami's cost estimates, what is Helios's expected cost of acquiring a new customer through thecampaign?c.Using the information you just calculated, what is the estimated cost to get one more person toclickthrough and make a purchase?Answer:Let's break this down step by step to answer the questions.Part A: Expected Total Cost per Quarter of Helios's Internet Advertising CampaignThe total cost will consist of:1.Banner ad development cost: Afixed cost of $5,000 for the development of 5 banners perquarter.2.Banner ad placement cost: This is based on the number of impressions (ad views) and ispriced at $0.80 per thousand impressions.3.Banner ad click-through cost: This is based on the number of click-throughs (people whoclick on the ad), with a cost of $0.02 per click-through.Step 1: Banner Ad Development Cost•Development cost= $5,000 (fixed per quarter)Step 2: Banner Ad Placement Cost•The placement cost is $0.80 per thousand impressions, and the estimated number ofimpressions is 2,000,000.•Impressions cost= (2,000,000 / 1,000) * $0.80 = $1,600Step 3: Banner Ad Click-Through Cost•10% of viewers will click through, so 10% of 2,000,000 impressions = 200,000 click-throughs.

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