Re: Next Generation Pricing Models

From: Vinod Nambiar <vinod_at_webshastra.com>
Date: Thu 29 Nov 2001 09:49:12 -0500

To all worried about moving to a cost per action model
ignoring the fact that there is brand exposure happening,
one might put to rest their apprehension that it will
never be so. The value of exposure has to be considered,
so also the waste of over exposure. Based on todays
models, most buys of 1000 impressions can translate to
anywhere between 1 and 1000 users (assuming no
exposure limits have been set)

The issue with CPM for marketers is as one observes,
response, as measured in terms of CTR, has been
reducing. And its not because marketers have come
up with less attractive products over the year, but
because there has been a surge in impression
consumption. As an extreme example to make things clear
if earlier on a person used to click on 2 banners per
day, they were exposed to 10, translating to a
theoretical 20% CTR. today also they are clicking 2
banners but are exposed to 100. The enormous increase
in websites over the last 2-3 years stands testimony to
this.

Morover I am sure branding gurus agree to the principle
of over exposure. more than 4 exposures do not lead to
any incremental branding effect, whatever. (result of a
popular IAB study)

With this perspective, I agree the need for newer
pricing models based on unique audiences and strongly
believe this is the way ahead. At the end of
the day, advertisers need audiences, and the Internet
can offer just that.

Because once sites start selling user sessions they
are essentially selling individual audiences. They are
essentially selling an opportunity for marketers to
expose their message to relevant individuals . This
could be through online banners and even thru email,
where the users mail address is available.

We are working on a framework to explore a cost-per-
audience model. Here advertisers would pay based on a
cost-per-audience model. The CPAud value here would be
much higher than average CPM values and would vary
based on the product in question. ie the advertiser
will be willing to pay for exposure to the audience
based on their acquisition costs. The bottom line
here is sites should know their audience better and how
likely they would be to respond to the marketers
message, so a level of segmentation is done before the
advertising sale process. And as long as the audience
can be specified CTR would no longer be the measure of
response, but exposures.

Regards

Vinod

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Vinod Nambiar, CEO
Webshastra Private Limited
Bangalore, India

Turbocharge Marketing : Add Internet :
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Received on Thu Nov 29 2001 - 08:49:12 CST