RE:More suggestions...

From: Miguel Alvarez <miguel_at_encenta.com>
Date: Thu 25 Oct 2001 17:07:21 -0500

Dear Kevin Frazier,

Your post was a bit long so I will have to cut it up
some so I can reply to each point. I do not wish to take
it out of context so if anyone of the readers desire to
read Kevin's full opinion please refer to his October
17th post.

One comment before I begin: I would like to know if your
monthly pay check is solely dependent on your selling
CPM and CPC. If so, I can understand why your opinion
weighs so heavily on the point that CPM and CPC are a
must for the online world. My sole income is derived from
finding publishers for my CPA deals and I do extremely
well at it. So, I believe my opinion is as biased as
yours, on the other extreme, but it makes for good
debate. I hope you all enjoy reading the best case for
CPA I can come up with.

KEVIN FRAZIER <kfrazier_at_adace.com WROTE:

>Stop accepting CPA and CPC deals without a base CPM
>guarantee.

>Cost per conversion/lead advertising should not be the
>sole responsibility of the website. Print and Television
>do not have to sell ad space based on conversions, and
>neither should a website. There needs to be value placed
>on the delivery of your brand, and the broadcast of your
>message. Granted conversions matter, but so does exposure.
>If conversions are the only metric you are interested
>in, then run some smaller tests until you identify the
>sites that work, so you can keep costs down while you
>dial in on your audience. Don't put pressure on the
>site publishers to give you something for nothing, as
>this will only delay the online advertising industry
>from achieving the success it deserves.

Maybe I am missing something, but where were we all during
the dot com rise and crash? Maybe one of the main reasons
for this crash is because buyers and sellers of this new
online medium referred to their offline expertise and
techniques, without enough historical data to wisely
manipulate it. Now, it is clear to me that online
advertising is not to be compared to offline advertising.
Why? The Web records everything real-time, traditional
media doesn't.

Have any of you ever wondered how many traditional media
advertisers have ever wasted their money on unsuccessful
campaigns? How many businesses have gone out of business
or wasted millions of dollars because their traditional
media didn't pay off? If anyone tells you that "traditional
media works" please ask that person to provide you with the
answers to the questions above. The reason why people may
say that "traditional media works" is because that is all
we knew back then so that is all we have to go by. Thank
goodness for leveling the playing field with online media ;-)

In short, the advantages of this new online medium are
forcing the playing field to become fairer. On the Web you
can almost immediately track success and failure of a
campaign based on the action that took place. TV and radio
can't do that in an "immediate" sense. These are apples
and oranges.

Let's step back and think of the investors of these
surviving dot coms. I bet you they are now pressuring for
RESULTS and not BRANDING. My personal belief is that
branding in this online medium works best for Fortune 500
companies, which have product readily available near the
person being advertised to and have the budget to chalk
up unsuccessful campaigns as "branding." Let's take Coke
for example. Banner advertising is great for them. After
watching a tantalizing Coke banner ad I can literally walk
no more than ten steps from my office and buy one. Online
advertising also works for Ford. Why? Within a 24 hour period
I will most likely see a couple hundred of those on the
road and maybe even one or two car dealerships.

Again, in my opinion, small businesses are unable and
shouldn't be willing to test 10 different publishers to
find the one golden goose. This should be, and is currently
seen as, a loss of 9 and a gain of 1. The probability that
that one good publisher will exhaust before paying off the
other 9 bad buys is high. Paying unproven CPM is almost like
playing in the big leagues, right along with the Fortune 500
boys (and girls :-), when they should be playing little
league. Little league players probably have one chance in
a million that the branding a CPM campaign will provide
them will have a Fortune 500 type of impact.

A few other good points are that I find that those selling
strict CPM and CPC state that they have "the best users
demographically" for almost anything I need to push. They
almost never touch on the FACTS while discussing the selling
of these CPMs and CPCs. What isn't usually covered in a
media buy that should? 1) How did you acquire your member
list? 2) Are you going to credit me the 5% to 10% of your
traffic that is derived from search engine bots (program
that generates clicks without human intervention and are
programs that search engines use to spider through the Web)?
3) If I buy on CPC how do I know you won't run a bot to
fill your quota and are the clicks incentivized? 4) If I
buy on a CPM how do I know you won't run a bot to fill the
quota, that your list is clean, how burnt out your list is,
how many of my competitors you've already pushed to the list,
and how good your open rate is?

Someone out there, please help me find a solution to the
unspoken problems stated above. That is where the real
CPM vs. CPA battle is waged. I don't have all the answers
but no one out there seems to be pin pointing the real
problems. I hope my opinions are of some help to some of you.

>Advertisers: Put some skin in the game
>Right now this market is controlled by the advertiser.
>They are putting juicy carrots in front of starving
>rabbits and attaching long strings.

>Networks: Be a better referee
>If all ad networks and site publishers would agree to hold
>the line on floor pricing, guarantee base CPM's, and not
>accept a flat CPA/CPL deal, then we would have more
>opportunity to focus on finding more effective online
>advertising solutions.

These rabbits are starving and dying because they are
staunch on CPM and they won't budge. It is a bit late to
still think CPM SHOULD follow traditional media practices.
Anyone agree?

In conclusion, I hate people that find problems but don't
offer solutions. So, here it goes: First, do away with CPC.
Don't buy it. Don't sell it. It is too easy to cheat the
system. Second, I understand large networks have already
spent millions in structuring their business around CPM
and CPC. I suggest networks require each publisher within
their network to give up 10% of their CPM inventory for
the sole purpose of testing CPAs. Revenue will still be
generated from the 10% but it just won't be guaranteed.
These advertising agencies can still stand firm behind a
base CPM and only push the CPA offers that perform to
their satisfaction after each CPA test.

The results generated from this technique will probably
become one of the most powerful acts of media buying and
selling that has been known to date. Sellers and buyers will
be forced to work harder than ever to find the best match
for each campaign. This system will generate more
motivation on both ends to find the perfect match.
Besides the excitement of finding the perfect match, the
end result will be: less advertisers burnt, better
advertiser/publisher relations, and more revenue for us all.

Performance based solutions always win. In my opinion again,
all media buyers should be paid strictly on commissions for
selling CPA campaigns. They can buy as much CPM and CPC as
they wish but if they don't perform to the guidelines of the
CPA performances take the loss out of their pay checks. It
works. That is how our entire company is structured. Only
producers like me get to keep their jobs :-) and are
compensated accordingly.

Best wishes to you all. I'd love to hear anyone's feedback
on my opinions. I think a response like this is very much
overdue. And, when responding, please state what your source
of revenue is, CPA or CPM, so that I know where you are
coming from.

Cheers ~

Miguel Taylor =C1lvarez
Encenta, Inc.
VP, Sales & Marketing
(801) 431-0022 x 204
mailto:miguel_at_encenta.com
Encenta.com
WinDaily.com
TheTravelClub.TV
GuessTheView.com



Received on Thu Oct 25 2001 - 17:07:21 CDT