Commentary

Simple, But Effective

By Michael Kubin, co-CEO, LWA

We bought a puppy a while back, a very cute little red poodle we named Loki, and were immediately faced with the challenge of housebreaking him. The process is simple, really; we started by putting newspapers on the floor of an entire room so the puppy was free to poop wherever he wanted. But Loki quickly began to get the idea that newspaper underfoot meant pooping area. Over time we gradually reduced the area covered by newspaper until, after a few patient weeks, it was just a little square tucked away in a corner of the room. And from then on Loki knew to poop only in that precious little place. Simple, but effective.

Changing gears, someone threw this factoid at me the other day: 58% of all ads on the Web are sold on a "CPA" --cost per action-- basis. That is, the advertiser only pays for every action (click, sale, whatever) that results from his Web campaign. He's paying for something "tangible" rather than on the basis of a CPM, or cost per ads viewed.

That 58% of all ads sold on a CPA basis are kind of like the newspapers spread all over the floor during the first days of housebreaking. Why? Simple. We didn't trust the puppy to poop in any one place, so we covered everything. Advertisers and their agencies are showing a huge lack of trust in the Web as an advertising medium, and so they are insuring themselves by the expedient of paying only for tangible actions by the consumer.

It's the mark of an immature medium. During the early days of television a large percentage of ads were of the direct response variety, requiring consumers to call in to buy the product. As television matured, and as advertisers and their agencies learned how to use the medium, the percentage of direct response dropped to its current 10-15% level.

Advertisers are correct in treating the Web as an immature medium; it represents only a tiny fraction of ad dollars spent in all media (around 2-3%), and most agencies really haven't bothered to figure out how to use it properly. It's mostly an afterthought, so why not just put newspapers down all over the floor and let the puppy do his thing. Simple, but effective.

But as in the early days of television, this type of risk-free advertising serves to give advertisers a taste of what the Web could be. Keep in mind that every audience measurement service agrees that Web viewership is continually increasing; the truth is that the Web is taking the audience's attention away from other media. Marketers can't ignore that, and so they have to figure out a way to best take advantage of the Web.

CPA buys are fine for now; marketers should rush to take advantage of this deal while it lasts. And the soft advertising marketplace means these deals will be available for a while to come.

But not forever. Remember, Loki hardly ever poops on the tile any more.

-- Michael Kubin is co-CEO of New York-based Leading Web Advertisers (LWA) - http://www.web-advertisers.com - a comprehensive Web

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