NONE: Re: ONLINE-ADS>> Low CPM's Mean Death
Re: ONLINE-ADS>> Low CPM's Mean Death
Ray Taylor (taylor_at_bizbiz.com)
Thu, 15 Oct 1998 10:06:52 -0500 (CDT)
"BRIAN J. WEINER" <BRIAN_at_ATTITUDE.NET> WROTE:
>Really it seems to me it comes down to simple axiom people
>much as they can get for as little as they can get
>regardless of its value.
I hear this point raised all the time by media owners, but
the desire to reduce CPM rates is not just a simple case of
getting as much as possible for as little as possible.
Since a large proportion of our revenues as an online ad
agency come from agency commissions it is as much in our
interest as the media owners to have clients spend big
budgets on web advertising. But the position we are at in
the UK, at least, is that most advertisers are still trying
out low-budget campaigns to test the water.
If these low budget campaigns work for the client then they
will move on to serious budgets which will benefit everyone.
But if they don't get sufficient payback for their
advertising spend then they will just give up. And because
it is a new medium the payback must be clear, demonstrable
and unambiguous. For this reason we provide a simple
cost-per-click comparison between sites during and after a
campaign. It's crude, but until the industry comes up with
something more useful, it stays.
And just to clarify how this works. If a $20 CPM campaign
produces a 1% click-through then the client gets to pay
$2.00 per click. If they get a 1% conversion to sale, then
that makes $200 per sale. Which is fine if you are selling
automobiles, but a drag if you are selling sneakers. Sure,
you get the "brand building", but if you don't get something
else too, you might as well advertise old media where you
know what you are getting for your money.
People who sell web advertising naturally want to preserve a
high price. I understand that, I have no complaints about
it. But people who sell web advertising should understand
that advertising budgets don't appear out of nowhere,
particularly in new media.
I am astonished at the aggresive attitude of some media
owners toward price. With the amount of quality unsold
inventory about, it's a buyer's market. No amount of taking
the pricing moral high ground will change that. It will be
even more of a buyer's market next year.
The only solution to the media owner's problem is to expand
the market by getting more advertisers to spend more money.
You can argue as much as you like that "Low CPM's Mean
Death" but it doesn't impress anyone with any money to
spend. If a site don't work for us we ain't gonna spend the
money.
Pricing is not about ranting and raving about the supposed
hidden value of a product, it is about matching the needs of
buyer and seller within limits imposed by the market. In web
advertising (in the UK) the biggest limit imposed by the
market is that few advertisers take it seriously, and of the
few that try it out, many discover that it can be a waste of
their money.
Ray Taylor
NMC/Adplan UK
+44 181 639 0015
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