CPM has been dying a slow, painful death since February 2002 when Google made its CPC-priced AdWords the first reliably successful advertising product on the internet.
Search
advertising existed before Sergey and Larry introduced their baby to the world, but innovations such as Quality Score and bidding on CPC pricing turned search into the internet juggernaut it is today,
comprising 45% of all online spend in 2008, all on a product that only began serious use a few years earlier.
It wasn't
about technology, it was about business at that point. But, technology had to drive it, and the ability to capture what people want -- the customer's intent -- was something Google had been working
on for years and now they'd found a way to best deliver ads based on that intent. This is something any good marketing campaign strives to do, and it's something display advertising never understood
in Web 1.0 and decided not to for the 10 years following it.
Only now are we seeing the technology part begin to deliver some promise for display. Semantic advertising, behavioral advertising,
remarketing, and dynamic ads targeted by any of those methods are beginning to crack the nut of how we can deliver consumers a tailored message based on what they want. I knew things were finally
changing in the old "billboard" method of online advertising when I began to see even actual billboards going digital and intelligent on the Jersey Turnpike.
Nevertheless, the
overwhelming majority of media companies still see the world in terms of CPM -- exposure, share of voice, and impressions -- yet marketers who have ever put a dollar into search don't care about
any of these things. Google ruined it for everybody, people, and now we have to deal with it. It unearthed the true underlying (and measurable!) motivation of direct marketers: to maximize
revenue. Before search, marketers were placated by a series of proxies for revenue, each more distant than the last. CPM is the prime example of this.
But years ago search became cheap and easy
enough for any marketer to use and whose accountability and measurability actually spoke in terms of unique visitors to their online store (not quite revenue but far closer than "share of voice" or
"number of impressions"). The reason that display is still primarily a CPM based model is quite simply because traditional display ads can't deliver nearly as much ROI as search when compared on the
same metrics. So, we revert again to the print advertising and billboard model of pricing and measurement.
But they say denial is the first step toward getting over the death of a loved one.
Demand will drive the market, and demand for more accountability (CPC, CPA) and performance is something we'll continue to see more of. With display technology finally catching up to search in
performance marketing, isn't it time that the business model grew up to accept that?