NONE: Re: ONLINE-ADS>> Low CPM's Mean Death
Re: ONLINE-ADS>> Low CPM's Mean Death
Leo Sheiner (leo_at_netcomuk.co.uk)
Mon, 12 Oct 1998 13:10:08 -0500 (CDT)
NICK USBORNE (I THINK) WROTE:
>The supply and demand argument works both ways.
>The likes of Rob Frankel and Andy Borland are not dumb. If
>they can weather the storm, I figure they'll be there at the
>front of the line when the dross falls away and people say
>yes to paying, one way or another, for quality content.
Of course they are not and in fact since I do business with
both of them I can vouch for the fact that they both have
successful business models. If Andy has a problem at all
it is not having enough inventory to fulfill his demand. He
delivers a niche quality audience and gets a commensurate
reward.
NICK USBORNE THEN WROTE:
>(Jaffer Ali and Leo Shiener have) made their online
>businesses work and they've made the bucks
>model? No. And remember - a visonary on the internet is
>someone who can see into the future for a whole three weeks,
>compared to the two weeks the rest of us manage.
>It's still wide open and there's a whole heap of unexplored
>'market realities' for us all to explore.
Again I agree here (although I would like to believe I can
see further than three weeks ahead <g>). I also agree with
"Robert Gordon" <bgordon_at_theautochannel.com> who
makes the valid point that quality can vary greatly and
makes the plea "Enough of this broadstroke medium
cpm discussion."
We are busy working on a project which will generate
expensive CPM sometime next year so I would certainly
not argue that all CPM is overpriced. It has to be clear
that there is not a monolithic standard CPM price. There
are differences in quality and therefore price. Even on our
network which is about as perfect a market as any on the
net for advertising we get a variation of between $1 and
$10CPM depending upon a whole range of factors.
Much depends on what you are selling and who you are
selling to and that must determine what an advertiser is
willing and able to pay.
The point I have repeatedly tried to make however is that
the wide spread in price is unsustainable for *most* sites.
And that simply witholding inventory (which is a sure sign
that your inventory is overpriced) will not in the long run
do you any good. It is simply a case of replacement
options. If you want to charge 40 times what your
competitor is charging you better make sure your product
is 40 times as effective. Otherwise in the long term you will
lose the businesss.
The way supply and demand works is that all other things
being equal, demand looks to find the lowest cost of supply.
Of course you can have an imperfect market and that does
make it appear for some time that the equation isn't working.
That is often the case in a new industry such as the Internet
where new buyers who are unfamiliar with the medium may
simply go to the biggest supplier. Yesterday a new advertiser
told me how delighted she was at the fact that she was getting
substantial new registrations every day at a cost of only 50
cents each on our network. The largest competitor network
(who will remain nameless) had done a test for her and had
quoted $4 each. So who is getting the business <g>?
Buy into 441 million pageviews p.m. on 11,849 host sites to gain
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mailto:leo_at_global-m.com Telephone +44181 346 0770 Leo
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