• by Christopher M. Schroeder , June 14, 2004

All the hype surrounding Google's potential valuation may be missing an even more earth-shattering event for the future of online marketing. Online search has let a genie forever out of the bottle-pay-for-performance (PFP) is cheap, it works, and it is perfectly attuned to the measurability of the Internet. In the best case, PFP will continue to put pricing pressure on all advertising, but here is a more provocative question: Will the rise of PFP success do to the cost-per-thousand (CPM) what TiVo and personal video recorders (PVRs) are doing to the 30-second spot? Not today, not tomorrow, not even in a year, but steadily and assuredly over time?

Yes, paid search is more akin to Yellow Pages. Yes, it offers little, if any branding opportunity. Yes, Tiffany won't want to depend on branding here next to some mom-and-pop joint. Yes, neither cost-per-click (CPC) nor even cost-per-action (CPA) measures all of the power of Internet advertising.

But there is a funny kabuki dance going on in the online advertising world that buttresses the question. For some time now, online marketers have been telling publishers that: "Sure, we know you offer more value than click-throughs in branding and in driving actions off-line. Sure, we're willing to pay you per thousand for this because we know that traditional publishers come from CPM backgrounds. But, in the end, we only pay you YOUR CPM, because it calculates to OUR cost per action!"

Advertisers want, and expect vast and fast measurable accountability. And, by the way, they want it progressively from ALL media. And, they want to pay only for that. Wouldn't you?

Let me take the point a step further. Most quality publishing sites attract visitors around 30 minutes per month, as compared to, say, 30 minutes a day for a newspaper. Now this is unfair, as power users come from much longer than that to favorite sites, but the overall point holds: What it the potential for a branding, emotive experience on what is fundamentally a transaction-oriented medium? Look at the wonderfully innovative online marketing campaigns like Jerry Seinfeld's for American Express, or the chicken site from Burger King. Is it possible that the future of branding online will be done progressively on destination sites, and online publishers will be leveraged for "click-through" to branding?

I hope I have gotten your attention. But here are two truths to rally around.

First, the curse that online advertising is held to a higher standard of measurement because it is measurable, is offset by the blessing that we are as measurable as we are actionable. Not only can we be held accountable, but we can DELIVER to quality, targeted audiences at times of the day no other medium is reaching them, capturing both the active and passive buyer unlike any medium in history.

Second, content publishers are armed with a wealth of research from the Online Publisher's Association, the Internet Advertising Bureau, Dynamic Logic and many other providers, to show that branding, does in fact, work on sites when targeted at the right audiences. The research shows that online advertising with affinity to quality content providers enhances a consumer's desire to buy. That interactive marketing, woven smartly into the media mix, has a multiplier impact on a marketer's return-on-investment (ROI). That interactive marketing is as, or more effective in driving OFF-line actions as online.

Understanding, clearly, a marketer's ROI requirements, and delivering quality results through increasingly granular targeting will make the "whither CPM" question, in a way, irrelevant. There are plenty of marketing dollars for that which works, and that which interactive marketing offers combines reaching users with information they will value because it is relevant to them. People skip through 30-second ads NOT because they hate advertising, but because they view the ads as irrelevant to their lives. Online advertising, done right, is about being relevant. And, therefore, it is about better results.

In subsequent columns I'm going to write about the kinds of products and infrastructure advances that will make online advertising a progressively stronger proposition in any business model. In the meantime, let me end by stealing from Mark Twain: The death of the CPM is greatly exaggerated. Exaggerated and, over time, even irrelevant.

Chris Schroeder, vice president, strategy for The Washington Post Co., welcomes your feedback.