NONE: ONLINE-ADS>> cpm/cpa debate
ONLINE-ADS>> cpm/cpa debate
Jeff Swan (jswan_at_broadcast.com)
Fri, 2 Oct 1998 05:45:16 -0500 (CDT)
Re the raging debate about whether cpms will hold or give
way to cost per action or revenue share ad models: Let's not
assume that the companies who are spending the most online
today will continue to represent the bulk of all online ad
dollars tomorrow.
Obviously, the reason some sites accept cost-per-order ad
buys from Direct Marketers is because they have excess
inventory. But beware. One big reason that there is excess
online ad inventory relative to demand is that big mass
marketers like P&G have not committed their huge budgets to
the web -- yet. But, P&G and the others may soon greatly
increase their online ad budgets, if certain measurement
improvements discussed at the FAST Summit can be made. And,
keep this in mind - P&G has been content with Nielsen
sampling techniques for tv, so let's not assume that each
and every web surfer needs to be counted in a census to
satisfy the mass marketers' need for demographic targeting
data. That data is coming soon.
P&G is not primarily a direct marketer, they are a mass
marketer, and their products are sold through mass
distribution channels. They won't need to sell something off
their web site to make their online advertising worthwhile,
because distributing a bar of soap in bulk quantities
through trains, trucks and big supermarket chains is
actually more efficient for them than mailing individual
bars of soap out to individual households, and it's easier,
faster and certainly cheaper for most people to drive a
short distance to a store versus ordering those products
online. (Why do you think Jeff Bezos built Amazon around
Books and CDs instead of detergent and cereal?) This applies
to Pepsi, Coke, Kellogg's, Johnson & Johnson, Kraft, General
Mills, Quaker, Lever Bros., Anhueser Busch, Miller, Coors
and most of the big consumer products companies that spend
the big bucks on mass advertising anyway.
Online cpms are already attractive to consumer package goods
companies without going any lower. They compare reasonably
well to TV cpms. And audiences are getting big enough to
make it worthwhile for mass marketers to get excited. All
publishers need to do is be able to measure their audiences
better(coming soon), and the cpm model will thrive online.
And, for the time being, there is no cost efficient method
for mass marketers to track individual responses to
individual ads, since the most efficient point of purchase
is a store shelf, not a web site. So the web publishers and
web broadcasters aren't going to be held accountable for the
"purchase action" any more than TV stations and magazines
are held accountable for those actions now. The actions they
*will* be held accountable for will be to adjust attitudes
of targeted consumers positively toward their products, i.e,
"Branding".
Of course, many sites will not be able to meet the
requirements of mass marketers re audience size and detailed
demo data (which will actually restrict the qualified supply
for Mass Marketers), and thus, those smaller sites will
still be glad to accept cost per action deals. But, the
sites that draw the mass audiences, and that have the
ability to accurately report the demographics of the people
viewing their pages or watching their multimedia programs -
those sites will be able to sell on a cpm basis, because a
cpm is fine for mass marketers. So there will be room for
both Cost per Action for Direct Marketers and CPM for Mass
Marketers, and many combinations of the two. The market will
take care of this by itself.
Jeff Swan
Director of E-Commerce Sales
broadcast.com
jswan_at_broadcast.com
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