Re: ONLINE-ADS>> Low cpms mean death

Jaffer Ali (jali_at_pulsetv.com)
Mon, 5 Oct 1998 19:59:22 -0500 (CDT)

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I am always amused when publishers or advertising executives
thinks they can control the price of their advertising inventory
in the long run. Bob Gordon says:

><<. I will close shop before I let any advertiser gain co-branding
>enefits( or any exposure) at a $1 cpm.>

The market will dictate the true vale of advertising inventory over time.

Bob Gordon then says:

><< If Low CPMs become the norm, it will reduce the overall effectiveness of
>the Internet as an advertising medium,
>because there will be no original content published.>>

This is patently absurd. Please take a look at these real
life figures.

The most expensive commercial (:30) this year on broadcast
television was on the Jerry Seinfeld farewell episode. CPM?
Answer $16.50

CPM for a 1/3 of a page ad inside American Legion magazine
(a very targeted medium with a circulation of 2.4 million)
$2.50.

Overall Riverdance Video television direct response campaign
CPM $1.25

Over all STOMP video direct response campaign CPM $2.50
(pulled after 4 week test)

FSI (Free Standing Insert) in Sunday papers CPM $2.50

Bob: As a fellow publisher, who also markets on the web, you
nor I can have much effect on long term rates by ourselves.
Even if you (we) would band together in a cartel like
fashion with Broadcast.com, Yahoo, Infoseek, etc., supply
and demand pressures will take hold. They will occur sooner
once venture capital dries up or funds from an IPO have been
depleted. Our sites and e-mail publications may only
generate 3 million impressions a month, but I'll be damned
if I am going to wait for a knight in shining armor to save
my rear end.

So, we will generate as much revenue possible from unsold
inventory...including selling videos, CPA deals, CPC deals,
and even will do things for Flood Relief. Anything except to
sit on it like a mother hen waiting for our fortunes to
hatch.

For what it's worth, a gentleman like Leo Sheiner, who
routinely gives economics lessons should be taken to heart.
Adam Smith wrote about supply and demand long before the
Internet. It just seems that too many Internet executives
would rather regress to unsound economic theory.

Jaffer Ali
http://www.Laffaday.com
http://www.PulseTV.com

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