In today’s digital landscape, it’s all too easy to view online advertising and traditional brick-and-mortar marketing as two separate worlds. On one side, you have physical stores that rely on foot traffic and word-of-mouth to survive. On the other, you have websites and e-commerce platforms competing for impressions, clicks, and conversions in the vast digital space. However, a closer look reveals that these two worlds aren’t so different after all. The primary difference is the channel—physical space versus digital real estate—but the underlying logic remains remarkably similar.
In this article, we’ll explore how programmatic advertising parallels the economics of brick-and-mortar stores, discussing impressions and foot traffic, clicks and potential customer visits, and ultimately, conversion and sales. We’ll also dive into how investments in prime “digital real estate” can lead to greater brand awareness and more robust returns over time. By the end, you’ll see why real estate in high-traffic areas is more expensive for both physical and digital spaces, the typical ROI expectations, and how various programmatic channels (Display, Online Video, CTV, Audio, and DOOH) work together to drive business success.
1. Understanding the Real Estate Analogy
We often hear that having a premium spot for your store—like a busy downtown street or a popular shopping mall—comes with a high price tag. Why? Because people passing by your store are effectively “impressions” in a physical sense. The more people see your store (the façade, the signage, the storefront displays), the higher your chances of making a sale. Likewise, on the internet, your brand or product needs to be seen by as many people as possible—these are your digital impressions.
Physical Real Estate
- High-traffic areas → More pedestrians → Greater chance of walk-ins → Higher potential revenue
Digital Real Estate
- High-quality ad placements → More eyeballs on your brand → Greater chance of clicks → Higher potential revenue
The goal in both scenarios is to attract potential customers. In digital marketing, you pay for exposure in the form of impressions, while in physical retail, you pay for prime location. The logic is essentially the same: more traffic (foot or online) translates into increased opportunities to convert browsers into buyers.
2. Impressions as Foot Traffic
Imagine you own a shoe store on a busy street. Hundreds, if not thousands, of people pass by your storefront every day. Each individual who glances at your display window or your sign is equivalent to an “impression” in digital advertising. They might not necessarily walk inside, but they are aware of your presence.
Similarities
- Physical Storefront: Pedestrians passing by = foot traffic
- Digital Advertisements: Ad served to a user’s screen = impression
Importance of Volume
In digital marketing, impressions are crucial because they set the stage for potential engagement. Just as a storefront with zero foot traffic would never sell a single shoe, a website with no impressions will never make a sale. It’s a game of numbers—if you want more potential customers to become actual customers, you first need more eyes on your product or brand.
Quality Versus Quantity
While having a large number of impressions is beneficial, the quality of those impressions matters as well. If your storefront is located in a neighborhood where the foot traffic isn’t relevant to your products (e.g., you sell high-end fashion in an industrial zone), the chances of a passerby converting into a customer drop significantly. Similarly, if your online ads are shown to users who have no interest in what you’re offering, impressions alone won’t drive successful conversions.
3. Clicks as Customer Visits
Once people notice your store, the next step is to get them to walk inside. In digital terms, this walk-in is equivalent to a “click.” When someone clicks on your display ad, it signifies genuine interest—like a physical customer deciding to explore your shop.
Parallels in Engagement
- Physical Store: Foot traffic converted to walk-ins
- Digital Campaign: Impressions converted to clicks
A key performance indicator (KPI) that marketers use to measure how effectively impressions turn into clicks is the Click-Through Rate (CTR).
4. Conversions in Both Physical and Digital Realms
Ultimately, businesses survive on revenue, not just window shoppers or casual clicks. In the brick-and-mortar world, a conversion is someone who decides to buy a product after browsing your store. In the digital world, a conversion could be a completed online purchase, a form submission, or any other desired action (like subscribing to a newsletter or downloading an app).
Analogous Funnel
- Storefront / Digital Ad → Attract attention
- Walk-In / Click → Show interest
- Product Browsing / Site Visit → Customer evaluates the offering
- Purchase / Online Conversion → Final sale or completed goal
Understanding the Funnel Drop-Off
Not everyone who passes by a store will walk in, and not everyone who clicks on an ad will make a purchase. There are drop-offs at each stage of the funnel. However, you can optimize each stage—better store layouts for physical spaces, and better user experiences for digital platforms—to increase the number of people who move from one stage to the next.
5. Typical Click-Through Rates (CTR) in Programmatic Advertising
When it comes to programmatic advertising, one might wonder, “Why is my CTR only 0.09% to 0.12%?” This range is fairly common in the world of display advertising. People are bombarded with thousands of digital ads every day, and only a small fraction of them stand out enough for a user to click.
Why Such a Low CTR?
- Ad Blindness: Users become used to seeing ads and subconsciously ignore them.
- Relevance: If the ad isn’t relevant, users won’t click.
- Competition: There are many ads vying for the same user’s attention.
Why It’s Still Valuable
Even if the CTR seems low, each click is a person who has demonstrated genuine interest in what you’re offering. With enough impressions, the total number of clicks can be significant, and those clicks can turn into conversions with the right landing page and offer.
6. Why High-Traffic “Locations” Command a Premium
Just like a store on Fifth Avenue in New York City, or a shop in a famous shopping center, prime digital real estate is costly. Platforms or websites with a large, engaged audience can charge more for advertising space (higher CPMs). Simply put, you pay a premium for more potential customers to see your ads.
Physical World Example
- Popular Shopping Malls: High rent due to consistent and high foot traffic
- Busy Downtown Intersections: Expensive store leases because of brand visibility
Digital World Example
- High-Authority Websites: Publishers with significant, relevant traffic charge higher CPMs
- Prime Ad Placements: Banner ads above the fold or prime video placements cost more
In both worlds, the price is determined largely by the volume and quality of the audience. It’s why Google Ads on popular search keywords can be very expensive, and why a billboard in Times Square costs a fortune. The principle remains the same: high traffic equals high potential, which drives up the cost of entry.
7. The Role of Brand Awareness in Driving Sales Over Time
One crucial aspect of marketing—whether physical or digital—is brand awareness. Not every passerby or impression leads to an immediate sale. However, repeated exposures (physically seeing a store or digitally viewing your ads) can leave a strong imprint on a potential customer’s mind. When they finally decide they need your product or service, you’ll be top of mind.
How Brand Awareness Works Over Time
- Repeated Impressions: The more often someone sees your store or ad, the more familiar they become with your brand.
- Trust and Authority: Familiarity breeds trust. People are more likely to buy from a recognized brand.
- Long-Term ROI: Even if someone doesn’t convert today, the brand awareness you build could lead to a sale down the road.
Real-World Brand Awareness Examples
- Physical: A local café that sponsors community events, so people in the neighborhood keep them in mind when they crave coffee.
- Digital: Frequent social media ads and display campaigns that ensure your brand is seen consistently. Over time, your brand becomes recognizable.
8. Channels in Programmatic Advertising
When people say “programmatic advertising,” they often think solely of display banner ads. However, programmatic encompasses a variety of channels that allow you to reach audiences in different ways, just like a physical store might use flyers, billboards, radio ads, or TV commercials. Below are some popular channels:
8.1 Display
These are the traditional banner ads that appear on websites and mobile apps. Display is excellent for brand awareness, remarketing, and directing clicks to your website. The standard CPM (cost per thousand impressions) for display can vary, but $7 is a common benchmark in many markets.
8.2 Online Video
With the rise of platforms like YouTube and other video-centric sites, video ads can be a powerful tool for storytelling and engaging viewers. It allows for richer, more dynamic content compared to static banners. Video ads often have higher CPMs due to their immersive nature, but they can also drive more engagement and retention.
8.3 Connected TV (CTV)
Streaming services and smart TVs offer advertising opportunities similar to traditional TV commercials, but with advanced targeting options. CTV ads can give you access to a highly engaged audience, often sitting in the comfort of their own homes, which can lead to deeper impact. However, CTV inventory can be pricier than display or standard video placements.
8.4 Audio
Programmatic audio ads serve on platforms like Spotify, Pandora, and various podcast networks. As audiences shift to on-demand streaming and podcast listening, audio advertising can be a highly engaging format to reach them during activities like working out, commuting, or cooking.
8.5 Digital Out-of-Home (DOOH)
Programmatic has even extended to billboards, bus stop displays, and other screens in public spaces. With DOOH, you can serve dynamic ads in physical locations, often with the ability to target by time of day or specific geographic areas. It’s the direct digital analog to owning a physical storefront sign or a billboard on a busy freeway.
9. Investing in Programmatic Advertising: CPM, ROAS, and Budgeting
CPM (Cost Per Mille)
CPM refers to the cost per thousand impressions. For instance, a $7 CPM means you pay $7 for every 1,000 impressions. If your campaign serves 100,000 impressions, you’ll pay $700. The more impressions you buy, the higher the total cost. The logic aligns with paying for more foot traffic in a physical space.
ROAS (Return on Ad Spend)
ROAS measures how much revenue you earn for every dollar spent on advertising. If you need a 3x ROAS, that means for every $1 you spend, you want to see $3 in return. This is similar to a brick-and-mortar scenario where you’d compare how much revenue your store generates compared to the monthly cost of rent, utilities, and staff.
Budget Allocation
If your display ad CPM is $7 and you want a certain level of impressions, you can calculate how much budget you’ll need. However, it’s not enough to simply buy impressions—you need to ensure those impressions are targeted to people likely to convert. Otherwise, your cost rises while your returns remain stagnant.
10. Real-World Example: Achieving a 3x ROAS
Let’s break down a hypothetical scenario to illustrate how an advertiser might plan for a 3x ROAS, given a $7 CPM and an average order value of $100:
- Objective: The advertiser wants a 3x ROAS. For every dollar spent, they aim to earn $3.
- Average Order Value (AOV): Each order is around $100.
- CPM for Display: $7 for every 1,000 impressions.
Step 1: Determine the Number of Sales Needed
- Let’s say the advertiser sets an initial budget of $700.
- For a 3x ROAS on $700, they need $2,100 in revenue (3 × $700).
- At an AOV of $100, they need 21 sales to reach $2,100 in total revenue.
Step 2: Determine Required Impressions
- With a $700 budget at a $7 CPM, they will purchase 100,000 impressions ($700 / $7 CPM = 100,000 impressions).
- From industry standards, the CTR might be between 0.09% and 0.12%. Let’s use 0.10% (the midpoint) for simplicity.
- 0.10% CTR on 100,000 impressions = 100 clicks (0.10% of 100,000).
- Now, the advertiser needs to convert 21 out of those 100 clicks into paying customers (a 21% conversion rate), which is quite high depending on the industry.
Step 3: Evaluate Feasibility
- A 21% conversion rate from click to purchase is lofty in many sectors, meaning that the advertiser might need to optimize further or purchase more impressions.
- If the conversion rate is instead 5% (which might be more realistic in some retail scenarios), they’d get only 5 sales out of 100 clicks—leading to $500 in revenue, which is far less than the $2,100 target.
- To reach 21 sales at a 5% conversion rate, they’d need 420 total clicks (21 sales / 0.05).
- To get 420 clicks at a 0.10% CTR, they’d need 420,000 impressions. At a $7 CPM, that would cost $2,940—over four times the initial $700 budget.
This example demonstrates how the math of impressions, clicks, and conversions must align with your ROAS goal. Just like in a physical store, if your rent is sky-high, you need a certain volume of sales to cover costs and turn a profit. If you want a certain volume of impressions online, you need to invest an appropriate amount in your ads to drive enough clicks and conversions.
11. Conclusion
Programmatic advertising and brick-and-mortar store ownership share many parallels:
- Impressions = Foot Traffic
- Clicks = Customer Visits
- Conversions = Sales
- High Traffic = Higher Cost
- Brand Awareness = Long-Term Value
Whether you’re opening a store on a busy street or running a digital campaign, traffic drives revenue—but at a cost. Understanding your goals, such as a 3x ROAS, helps you reverse-engineer the number of impressions and clicks you need. Each channel—Display, Online Video, CTV, Audio, DOOH—can serve a unique function in your marketing mix, boosting brand awareness, engagement, and ultimately, conversions.
By viewing your website or digital advertising campaign as a piece of “real estate” that requires an ongoing investment, you can better understand the budget, effort, and strategy needed to maximize ROI. In the end, it’s not about whether you’re online or offline; it’s about reaching the right people in the right place with the right message. And just like a well-located physical store, investing in prime digital real estate can pay dividends in the long run—especially when you keep your focus on how impressions, foot traffic, clicks, and conversions all fit together.