NONE: Re: ONLINE-ADS>> Low CPM's Mean Death
Re: ONLINE-ADS>> Low CPM's Mean Death
MMG - John Audette (ja_at_mmgco.com)
Tue, 6 Oct 1998 17:49:39 -0500 (CDT)
Greetings Everyone....
Sender: owner-online-ads_at_o-a.com
Precedence: bulk
Rob Frankel wrote the following:
>>>>>
>Over time, if you stick your value in a realistic way, you
>fulfill your own prophecy of value. That doesn't mean being
>a stubborn pig, but it does suggest that you very often have
>to establish your values through leadership, not market
>pressure.
><<<<
Whew! No offense to Rob, but the ex-stockbroker in me is
astounded at how simplistic that statement is.
In well established, efficient markets (the stock market for
example), value is established purely by that old Internet
publisher bugaboo -- supply and demand. In less established,
ineffcient markets (the Internet for example), value can
*temporarily* be established by suppliers. However, as the
market matures and becomes more efficient, the powerful
forces of supply and demand will overwhelm all artificial
efforts to control prices. If the oil cartel could not hold
their artificially high prices that they arbitrarily set in
the early 1980's in an environment of dwindling energy
supplies, how do Web publishers think that they will be able
to hold their arbitarily set high prices in an environment
of rapidly expanding (exploding) supply?
There is a continuum of value in every marketplace. Where
your product or service places on that continuum depends to
a large degree on its level of commodization. At the low end
of the continuum are the pure commodities, soy beans for
example. Soy beans are a pure commodity and thus sell purely
on supply and demand (past efforts to add value to soy beans
via branding failed when no one could read the tiny labels).
At the high end of the value continuum are the extreme
value-added products and services. One example is providing
consulting services to foreign nations for the building of
power generation plants. This requires specialized expertise
and offers significant opportunity for *value-add* (which I
have always interpreted as the value that can be added to
the commodity base value).
Regardless of where your product or service lies on the
value continuum, in efficient markets pricing is *still*
determined by that annoying supply and demand. Prices are
higher at the high end of the continuum simply because the
added value has reduced the number of competitors, hence a
reduction in supply.
It's all just Econ 101. Hubris or whistling as you walk past
the graveyard will not change things in the long run. And in
the long run isn't it better to build a business plan on
market realities rather than on how we wish it could/would
be?
Jaffer Ali and Leo Shiener are voices in the wilderness.
Best Regards,
John Audette
.............. Focusing 100% on Your ROI ...............
M u l t i m e d i a M a r k e t i n g G r o u p I n c
.......... The Online Agency ~ Since 1994 ............
541.330.1527 ................. mailto:ja_at_mmgco.com
................. http://www.mmgco.com ...................
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