CPMs: Slow Trip on the Pain Train
Recently there have been a lot of articles regarding the decline in the popularity of CPM and Banner (read brand advertising) on the web. I think its obvious by now that the scarcity model that drove impression based pricing in TV, Radio, and Print doesn’t work on the web now because its a two-way channel that anyone can contribute to.
Surely this will continue to be unsettling for many publishers that are used to this model, but their inventory is still of value and usable with performance pricing, so there shouldn’t be too much panic on the train at this point. Advertising has finally evolved to what marketers have always sought (at least on the web): Pay for performance.
There is nothing wrong with this evolution for online media and there is a lot of money to be made (look at GOOG). If publishers can learn to live with the new rules of performance pricing and become experts in inventory management, they will learn lessons from this evolution in pricing and potentially apply it to older media channels.
If publishers are willing to evolve and admit that these pricing changes will dramatically change the model, then there can be a smooth transition. However, if they continue to try to foist old models on new media, then its going to be a multi-stop local with pain in every car.
Here are a few of those link referenced above:
Silicon Alley Insider: Online Display Ads Will Fall Sharply In 2009
Life2Beta: The slow death of CPM on the web
ClicketyClack: Thoughts On The Display Ad Market And Monetization
What do you all think?
2 Comments, Comment or Ping
Scott Parent
Interesting article Trip. For advertisers, this is a great thing. Speaking as a publisher it is definitely a shift. It’s no longer about the size of your audience, but instead how you are able to mobilize that audience to take action.
Oct 24th, 2008
peter bordes
online advertising needs to evolve. cpm’s cpc’s cpl’s etc all have value and are connected to users actions, But are treated as siloed actions. why not created a hybrid that gives value to them all depending on the users actions or how far they go from an impression to an action. there is tech coming out now that measures the length of time/engagement with an ad. this is taking outdoor characteristics and applying online measurement and accountability….. smart… we need innovation and evolution that takes a holistic approach to the value chain of ads and users actions.
Oct 25th, 2008
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