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Re: CPA, CPM...

From: Brad Jensen <brad_at_elstore.com>
Date: Mon 19 Nov 2001 22:07:45 -0500

RON SHERIDAN <ron_at_ronsheridan.com> WROTE:

>They have built
>such a large base of low end and newbee consumers that
>they can pull off CPA deals and make money.

CPM came about in the earlier media world, because it
was the value proposition that represented the most
cost effective manner in pricing, given the available
information about the interaction of the prospect with
the medium.

You did not have a way to track that individual, from
the viewing of an ad through the purchase process, in
any universal way that was objective and transparent.
At least, not without the cost of doing so being more
than the cost of the product.

Now with the web, you can do this. The publisher and
the advertiser can track the viewer in a manner they
can generally agree on, at least to the point of the
initial response action - the click.

The obvious answer is for the advertiser and the
publisher to be partners. That will provide the lowest
cost and highest value advertising on the web - which
is the best thing for all involved. Advertising is
actually a service to the consumer, and the lowest
cost and most effective service is the best value
proposition.

We are all consumers - so think about it: don't you
want to see the advertising that is most meaningful
for your own needs? What is most valuable for you is
most valuable for the publisher and the advertiser.

People cam into the web trying to preserve the value
propositions of print advertising - and it resulted
in dotcom failures and the disillusion that has
depressed advertising prices (and value).

I've been think for several years that the most
reasonable answer to this is to do adaptive
advertising. The ad network (and I am not using that
term technically - I mean Doubleclick and the
people like them.) puts cookies on the user that
represent his clicking and site preference categories.
I would even go so far as to put invisible graphics
on non-advertising sites to generate profile
information (and pay the site something for it to get
them to do it - or swap them ad space for non-ad info
space.)

Now when they get a new ad order on a CPA basis (hope
I have this term right, I've been only skimming some of
this for the last few months) and DoubleQuick (name
changed to provide interest) runs the ad across a
profile of different sites. 500 here, a thousand there.
As the clicks start coming in, the banner server rates
the sites on clickthru percentages, perhaps even doing
a regression analysis on the factors, and then looks
through its database of sites for good matches, adjusting
for the cost by site. Then it starts serving the ads
where they will do the most good. (Of course you would
need competitive lockouts). It constantly tune this,
allowing for time of day and other factors I won't go in
to until somebody gives me a couple of million dollars.

The point here is that people are prejudiced - computers
are not. So the computer takes the starting placement,
and adjusts it to the placement that generates the most
leads. The advertiser buys clicks or even purchases, the
banner serving company sells the clicks with the least
possible placements adjusted for the cost of the
advertising.

What your skilled people do is perhaps choose 25 or 50
sites - or 100 or 500 - to start the ad run. Since the
click cost is constant, the initial runup to get focused
doesn't cost anything extra - except of course the sites
are not earning anything until the clicks happen. But
then when the ads do become adaptively targeted in the
optimum fashion, the site is earning the most possible
money for its inventory. The advertiser is buying a
constant number of clicks or actions. The ad publisher
is serving the ads to the most efficient sites, giving
themselves the most revenue while keeping the most ad
inventory open for further adaptive runs. So it is a
better deal for everybody in the fairly short run. Even
the consumer/viewers are more likely to be seeing
ads that interest them.

I hope it is obvious that I am a software developer,
and I know how to do this. Basically what I am hearing
on this list is that it is a buyers market for ad space,
except on a couple of signature sites. The publishers
are despairing of ever getting a decent price for their
ad inventory, or even attracting the most lucrative and
appropriate advertisers. The advertisers don't want to
be bothered with smaller sites, even if there might be
good niche matches. The matchup process is as much
voodoo as anything else.

Remember (you old geezers like me) when radios had dials,
and you would tune in the station, then slide back and
forth over the station location trying to get the best
signal resulting in the best music? You wasted time, and
you were never really sure you had it absolutely perfect.
Now the radios seek to the next signal, lock it in at the
right place, and stay on it no matter how conditions
change. Automatic tuning. What I am suggesting is
advertising with automatic tuning.

There are some other strategies to make this effective
that I don't want to mention at this point. Think of this
as an automated ebay for advertising.

I can do the technical end, designing, writing, and
serving the system. (I've got a development staff that is
top notch, and I know the ins and outs of web programming
myself.) I need some money and the marketing organization
to make it go.

Like I said, a couple of million and a piece of the action.
Somebody from Kansas City would be a good match, we are in
Tulsa.

Ready to get rich? Ready to restart your ad revenue?

Brad Jensen
Electronic Storage Corporation

brad_at_elstore.com







Received on Mon Nov 19 2001 - 21:07:45 CST


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