I read recently that the “average” CPM on the Web is $4.50. I don’t believe that any more than I believed that they were at $32 a few years ago when that was the average. I believe that the average Web CPM is currently south of $4.50 and that it is going to be a long summer. Is there a relationship between CPMs and stock prices? You bet there is. The question then for sites selling advertising is how to get the CPM up higher (producing more revenue) so as to affect their valuation.
It might be easiest to just say that you can’t do anything about it. The market sucks right now and stocks will rise with the tide. Wait it out. Go to the Hamptons and come back in September.
Yet many sites get a premium vs. this mythical $4.50. How do they do this? It’s called the value of their content. It has always been true for any medium that some vehicles command higher CPMs than others. Sometimes this is rational (Monday Night Football in the heyday) and sometimes it is irrational (PGA tournament events on TV because a lot of CEOs want their spots to appear there).
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Sites like CBS MarketWatch, NY Times Digital, CNET Networks, Wall St. Journal Online and others regularly do deals at a premium CPM vs. other sites. These sites do a good job of positioning the value of their product and are also ahead of the curve in aggressive use of new ad units and new advertising concepts (dayparts, surround sound, etc.). They are also interestingly all members of the OPA which is doing an outstanding job of producing research that speaks to its’ member sites inventory value. (Check out the OPA White Paper, “Internet Metrics: The Loyal Audience, 5/29/02” posted on the OPA site). And they are working on more research in the same vein.
So be proactive with your site:
Many sites complain that all the agencies want is answers to their RFPs and it boils down too often to a CPM or CPA. That can be true when the final negotiations take place. An agency buyer would be foolish not to try to get the best price on inventory. But if you have something of quality, make sure that the word gets out BEFORE the RFPs go out. And do this in something other than an email (likely to get deleted) or another god-awful post card (who ever convinced all of these media that post cards to media buyers were effective?).
And who knows, as CPMs do rise (and they will) maybe you can get more than your fair share. It will affect your stock price and the attitude of your sales force.