Next Generation Pricing Models

From: Kevin Frazier <kfrazier_at_adace.com>
Date: Wed 14 Nov 2001 20:57:12 -0500

<<snip>><<Luis Martins Wrote:>>
Of course it's not a model to abide on the long
run, but CPM isn't either. As Rob Frankel said,
this is not a mass media, because we can treat
each and every customer on the web as one, and
not as a flock. So we should not apply mass media
techniques or metrics on the web, for they're
bound not to last. Due to announcers pressure.
<<end snip>>

Although I may disagree with the CPA evangelists
on this list, I do appreciate the feedback and
discussion that is being shared regarding
pricing models and online advertising in general.
It seems we all agree that CPM is going to circle
back and become the defacto measurement for
online advertising. It also seems likely that
unique visitors will play a key role in
determining the CPM rate.

The statement above about the web not being a mass
medium is true in some cases for the general surfer
or information gatherers. But those that frequent
humor sites to read daily comics, and those that
log on to live web streaming sites to watch a live
broadcast get us much closer to a mass audience.
Any scheduled web event could draw much as television
does. So again, we have another hybrid issue. Yes,
some companies could focus solely on the web as a
mass medium and have great success by serving this
space. Others, like "Rob Frankel" can focus on
delivering one to one acquisitions and create a
successful model on the web.

It is becoming clear that we need to be open to many
advertising models as there is room for more than one
model to flourish. CPA with a floor/base CPM. CPC
with a maximum impression limit to keep from delivering
too many ads for too few clicks. CPM with basic floor
prices that protect the bottom line, and better
measurement and tracking for unique users and
impression display. Discrepancies are really hurting
networks and publishers right now. Large campaign
purchases at rock bottom prices are also hurting the
market, as many of these large deals have 48 hour outs.
So they buy a 100 million campaign, run 1 million and
decide to pull it. Pricing needs to be there to
protect early termination. One final note.... Net 60
deals are just plain ridiculous in today's market.

I realize we are all trying to just get through the
unfortunate downturn in our economy. It makes it more
difficult to hold on to our ideals when we all need to
put food on the table. I only hope that we can find
ways to create short term results as we strive to
create long term processes that make sense for us all.
I'd like to open up one more line of discussion.

"Who do we count on?"

How do we determine whose count is correct? The
advertiser will always come back with less. The
website always comes back with more, and the
third party in the middle is closer, but never spot
on. If we sold on a unique basis over time, this
would not be an issue, as an advertiser would have
to pay for "x" uniques per day, multiplied by the
number of consecutive days, and number of pages sold.
I know I keep hammering on this point but I am
looking for reasons why this won't work??? Someone
please burst my bubble. Is the biggest issue the
fact that no ad serving software takes this scenario
into consideration? No ad serving reports drill
down in this exact way? No website analysis tools
allow for a complete picture? I think the next
"killer app" is going to be an application that can
track, compare, account, and factor, all the
aforementioned issues. If we had an application
that could crawl our logs, track our advertisements
individually, allow us to put a cost associated to
each ad, compare the delivery data, and spit back a
report based on unique usage, factor CPM by uniques,
add the number of days served, and multiply by the
number of pages that served the specific ad.... WOW,
makes me get excited! Many ad serving programs get
close, but "none" give us this control.

Once again, thank you all in advance for getting
involved with mapping out the next generation
pricing models for web advertising. Our knowledge
and contribution is helping define the many
opportunities that exist for advertising on the web.
Best of luck to us all!

Regards,
Kevin Frazier
CEO
AdAce, Inc.
http://www.adace.com
kfrazier_at_adace.com




Received on Wed Nov 14 2001 - 19:57:12 CST