Online Advertising Seminar: Pricing Online Advertising

From: donna stryk <donna.stryk_at_tenagra.com>
Date: Mon 15 Nov 1999 13:45:36 -0600

Here is the second topic in our online seminar. Please
send questions for the authors to seminars_at_tenagra.com.
The answers, will be coming on Wednesday.

PRICING ONLINE ADVERTISING

There are many mechanical issues regarding pricing
online advertising, such as paying for exposures,
click-throughs, purchases, or other measures, and the
authors are ready to discuss these subjects in the
seminar. But the bottom line is publishers want to know
how to get more money for their site and advertisers
want to know how to save on ad budgets. The answer:
just ask, and don't be afraid to be blunt. Below is a
brief excerpt on some trends in online advertising
pricing.

"Trends in Pricing"

Since the first edition of our book was published, we
have seen several significant pricing trends. Prime
real estate is costing a lot more than it ever has, and
less desirable ad inventory is cheaper than ever.
Keywords are an example of prime inventory. The price
for keywords has more than doubled on many sites over
the past year. And, some search engines will only allow
advertisers purchasing a threshold level of advertising
to purchase some of the most popular keywords. Hot,
well-targeted content sites have also been able to
command very high prices. iVillage is one example;
their network of web sites will rarely allow
advertisers who won't commit to spending $100K or more
on their site.

On the other hand, non-targeted sites that reach the
same audience as a search engine have had real
difficulty in maintaining their pricing. An untargeted
buy of $50K on a search engine can get a CPM as low as
$5. Search engines have enough excess inventory that
they can offer these low CPM deals to entice
advertisers. This makes it difficult for smaller sites
to charge high rates. Unless they're very narrowly
targeted, how can they justify to advertisers charging
more than what the advertisers would pay to run on a
search engine?



Received on Mon Nov 15 1999 - 13:45:36 CST