Re: CPM Pricing Models

From: Daniel Limbach <dan_at_attritiongame.com>
Date: Mon 21 Jan 2002 09:28:02 -0500

As a publisher myself, I've decided to deal more in
reality than many people in this discussion. Many
Internet publishers want to make something be a
certain way, even when it isn't the case in reality.
We're debating amongst ourselves, while the advertisers
vote with their checkbooks. It's rather silly, because
the clients aren't even reading this newsletter. We're
a support group for understanding the new nature of
online advertising from the publishers' perspective.

My point was, if someone has 1,000,000 impressions to
sell, they should be able to make money from their
sites without relying heavily on advertising. Choose
high-margin products that deliver good conversions,
and stop trying to sell ads at $.25 CPM. It can be
through an affiliate program, or your own products,
usually an ebook, software, or similar high-margin item.

Given the tables recently published in this digest, one
million impressions could result in 10,000 clickthroughs
at a 1% CTR (more if the ad is compelling). Given a 1%
conversion rate from there (or more if the site can sell
well), that's 100 sales. If you have a $50 product that
results in $30 net profit, that's $3,000 every time you
serve up one million sales. If you are good enough to
increase the numbers to a 2% CTR and a 2% conversion
rate, you quadruple your earnings! Do this with 3 or 4
products, and you've got a very nice revenue stream.
You'll have to rotate new products now and then, but
there are lots of things out there to sell with zero
development costs.

Creating your own product costs time and money, which
must be recouped. Going with an existing product means
lower margins. Take your pick or go with a combination.
If selling affiliate programs is so bad, why are so
many sites doing it? Because it beats selling advertising
space by a long shot. Internet ad sales is a tough way to
make any money. Facts are facts.

By the way, it IS a sin that TV and radio aren't held
more accountable for results, and they are really starting
to feel the backlash in the last 18 months. The Internet
is making advertising highly measurable. Embrace this,
don't try to be like TV stations and networks who want
things to stay the same as before. Things change.

Dan

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               Dan Limbach (847) 875-5691

     Win name brand products in a compelling email game
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              http://www.attritiongame.com
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Received on Mon Jan 21 2002 - 08:28:02 CST