Commentary

Just an Online Minute... Room for Compromise

Before I get into the biggest story of the day, a quick housekeeping item. As you probably know from an email we sent on Tuesday, MediaPost's MEDIA Magazine is hosting a Forecast 2002 event on October 25 in New York City. We have just a few spots still open, so if you'd like to join us, please click here to register.

That said, the biggest story of the day is the announcement from Interep's Winstar and Cybereps divisions, who declared today that they will no longer accept any Cost Per Action campaigns unless there is a minimum cash guarantee to the rep firms and the sites they represent.

We first reported on this in our MediaDailyNews this morning and already my inbox is flooded with responses from our readers, who are divided almost equally on the pros and cons of the announcement. Interestingly enough, most of the proponents of CPA pricing models are from firms that offer CPA pricing models to their clients, and most of the opponents are website publishers, but that was to be expected.

The weightiest argument against CPA pricing comes, of course, from Winstar Interactive Media President and Interep Interactive COO John Durham, who said, "Our sites do not want this business. CPA campaigns hurt our clients several ways - they take up an incredible amount of inventory for which our clients receive no compensation and the sites have to eat ad- serving costs. With these campaigns we take 100% of the risk and the rewards are few and far between."

Another opponent of CPA is Phil Hulett, Director of Sales at Clear Channel Interactive, who says that he and many others in the industry have "taken on the crusade to raise the collective psyches of Internet ad salespeople. The longer we continue to believe there is no value to our inventory, the longer savvy advertisers will continue to take advantage of us." He says that "CPC, CPA and other phrases are simply euphemisms for free advertising," and the tide is turning.

I can't say I fully agree with the above, and I won't bore you with pitches from several CPA networks. Suffice it to say that their weightiest argument is "our CPA advertisers are consistently coming back." And I have no reason not to believe that argument because according to the IAB, 10% of all online ad deals in the first half of this year were performance-based and 40% were hybrid CPM/CPA deals. That means that buyers and sellers can and should work toward a compromise. As one reader aptly stated, online ads need to make "cents" for all parties.

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