NONE: ONLINE-ADS>> Response to Rick Bruner- Ruffin post
ONLINE-ADS>> Response to Rick Bruner- Ruffin post
Chris Redlitz (Chris_at_Adauction.com)
Tue, 11 Aug 1998 06:58:32 -0500 (CDT)
Rick Bruner wrote:
>Or here's a tip: look at the sites that are selling their inventory for
>fire-sale prices on discount networks like Adauction. Then go to them and
>say, "Listen, your ratecard says your CPM is $30, but I see that after the
>15th of the month, you sell the same inventory for $5 CPM on Adauction. We
>both know you give Adauction a 30% cut on that, so why not keep the 30% cut
>for yourself and just sell me the space for $5 CPM right now."
>
>I think that above argument should send shudders thru the spine of anyone
>selling their inventory thru discount services like Adauction, because
>you're just telling the world your ratecard is nonsense.
>
>Generally, you'll get better prices buying in the middle of the month, as
>sales folks are desperate to make their monthly objectives by then, for any
>price.
I take issue with Rick concerning his comments about publishers
that sell online ad inventory through ad networks or an auction
channel like Adauction.com. First, nearly everyone recognizes
that rate cards are negotiable - even for up front buys.
I agree with Rick that there's a lot of unsold inventory, and
that's why services like DoubleClick, 24/7 and FlyCast got
started. This problem won't go away anytime soon. The time
equation is also a huge factor. As it gets later in the month,
prices tend to drop.
The rub concerns the underlying tone that pits the publisher's
direct sales against selling through the ad networks or the
auction. The fact is that publishers need both. Sites are not
shuddering away from the online auction either, as evidenced by
our ability to attract the top Web properties like Netscape and
Match.com; and still other top-branded sites are coming on board.
So why are publishers embracing the auction as an alternate sales
channel?
* We counsel our Web publishers to vary the quantity and type
of inventory for sale each month so that media buyers cannot
predict what will be offered. This prevents buyers from simply
waiting for the auction rather than purchasing up front. The
uncertainty also helps publishers preserve the so-called rate
card
* We allow sellers to select their starting bids for our
ActiveBid auctions (held the third Thursday of the month). The
minimum starting bid is $5 CPM (and higher for many sites). Of
course, since buyers compete against one another by bidding
upwards, the average ending price is higher.
* CPMs for our new CountDown auction (drop-price format) have
reached a high of $28 and averages $18
* Adauction.com sells in smaller lots than most large
publishers - which means a greater number of sales transactions.
While the publisher pays a 30% commission selling through
Adauction.com (and higher through ad networks) they save the
cost-per-sale associated with each of these small transactions.
Why is the online auction attractive to media buyers as an
additional sales channel?
* Buyers can purchase great inventory at discounted prices,
while they may not get all the benefits from purchasing up front.
The ad flight must conform to a 30 day schedule, and usually
begins a few days after the close of the auction.
* Buyers have the ability to select from a variety of sites
and categories, yet receive consolidated reporting and billing.
* Because of the unpredictable nature of the auction (i.e.,
quantity and type of inventory offered) buyers can use this
channel to supplement their ad campaigns when they have
discretionary dollars.
* It adds an element of fun to the media buying process. I
know this isn't necessarily a good business justification, but
hell, lets face it, once in a while we need to get the
competitive juices flowing and step in the ring.
We have seen that sellers like the idea of having a dynamic
marketplace where buyers competitively bid for their property and
buyers recognize the value proposition of a variety of quality
branded sites available to them through a very efficient buying
process
Sincerely,
Chris Redlitz
V P Media Sales
415-597-4830 x203
http://www.adauction.com
"Media Buying Made Simple"
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