CPM Floor Pricing Comment

From: Chris Charlwood <chris_at_charlwood.com>
Date: Mon 22 Oct 2001 16:13:47 -0500

I have to agree with Kevin Frazier's comments around
the need for publishers to clearly define a CPM floor
for performance-based CPA programs. I broker
many CPA and hybrid CPM/CPA deals where advertisers
come to me with offers which they have no proven results,
conversion history or effective CPM rates. Many do not
even know what an effective CPM rate is (the actual
revenue generated from a CPA deal over 1,000 impressions).
As an advertiser, really who wouldn't want to pay only for
guaranteed sales at a rate which ensures a steady profit
at absolutely no risk to them?

Advertisers must realize that they need to test and hone
their offers and truly understand their target audience so
that their offer pays out with at least a $3 to $5 effective
CPM rate on broad or untargeted lists, otherwise they are
projecting 100% of the risk of their offer onto the publisher.
For those advertisers with new or untested offers, the best
way to graduate towards a CPA structure is to start with some
deep discount CPM deals (I've seen rates as low as $2 to $3
CPMs for 1 MM+ solo-HTML lists) to test their offer and get
some conversion / CPA history. Some think that they can start
with a CPA and work towards a CPM program later on - which is
the cart before the horse. Brokers and/or publishers can't
be expected to accept a brand new untested CPA campaign offer
when they could be making a guaranteed CPM rate off of other
advertisers.

Another approach for advertisers to break into the CPA game
is to offer a non-refundable deposit which is off-set against
CPA sales generated, or pay half CPM and half CPA (hybrid CPA).
This way, the risk of an offer going flat is greatly reduced
for the publisher. Advertisers also have to ensure that
payment terms are kept inside of net 30, that they optimize
their landing pages with a reduced number of fields, they
test FROM and SUBJECT lines thoroughly to optimize open rates,
and most importantly that they provide reliable real-time or
daily results tracking. Also, they should think about initially
paying for leads vs sales (pay-outs can be at a lower rate),
which is much more palatable for publishers, but again, that is
only after performance history has been established with
CPM-based campaigns.

Chris.
__________________
Chris Charlwood
President, Charlwood eMarketing
t: 416.413.9196
e: chris_at_charlwood.com
w: http://www.charlwood.com
Specializing in opt-in email marketing, eCRM,
search engine placement & performance promotions.









Received on Mon Oct 22 2001 - 16:13:47 CDT