Sales-and-marketing expense as percentage of revenue: Rate of sales-and-marketing spending, or SME rate. A basic measure of marketing efficiency; can be tracked over quarters and against competitors to view a company's growth and efficiency. A quarter's SME may have residual effects to benefit future quarters' revenue. A company in growth mode in an emerging category will tend to have a high number-as long as investors continue to finance the dream. The rate of marketing spending at dot-coms is coming down as companies are forced to move from GAAP to GARP-from growth at any price to growth at a reasonable price.
Sales-and-marketing expense divided by new customers: Customer acquisition cost. An indicator of what an e-tailer, financial site or ISP spends to acquire a new customer. While a significant portion of a company's marketing may go toward existing customers, this simple metric offers a way to compare overall marketing spending vs. growth in customers.
Sales and marketing expense divided by visitors:
A measure of what a content site spends to get a Web user to visit. Based on Media Metrix's measurement of unique visitors to a site at least once a month.
About Pegasus: This study was produced for Advertising Age by Pegasus Research International (www.pegasusri.com), New York, an independent researcher that provides data and analysis about Internet companies to institutional investors.