I first learned of this school back in 2000 when someone on my team sold them an online advertising campaign at a rate much lower than we sold to others, and eight years later this advertiser is one of the largest on the Web. It's a classic case study of brand building on the Internet -- and yet we still find ourselves losing the battle for the value of branding that takes place online on our sites.
Why is the obvious branding value of a well-designed, heavily rotated and tactfully placed ad message on a color screen eighteen inches away from an engaged target audience so easily discredited? Because it can, and we as publishers let it be.
Look again at the example of how we treated this advertiser back in 2000. We happily agreed to allocate impressions against their core target audience at remnant rates because they asked and we were too immature to ask why back.
In public publishers beat their chests and say branding matters and CPMs must reflect this value -- but behind closed doors, we continue to concede to the demand we sell the actions of those we reach and not the access to the attention our brand collects. So we lower our CPMs with little deliberation to help meet performance metrics we have little understanding of -- or worse, we lower our standards the way Videoeggdid for all of us who play in the online publishing coop.
This third-party video aggregator recently launched a pricing program that charges advertisers on a cost-per-engagement model -- or what can be further dissected as a cost-per-mouse-initiated interaction with a displayed ad. Videoegg is charging a whole 75 cents per recorded interaction, which means that technically they are charging advertisers nothing for the exposure of their ad to your audience.
Here is the thing: if you don't charge for the exposure of a displayed ad in front of the open eyes and ears of a consumer you brought to the party -- who, for some unexplainable reason, chooses not to engage the ad further beyond seeing and or hearing it -- you are not in the advertising business. That's why search advertising sounds so appealing -- the advertising part is "added value" used to tuck in a direct marketing buy. The more online publishers mimic search engine pricing options, the faster they start competing in a business they're not in.
And if you are a publisher with a direct sales force selling your "premium inventory" whatever that means, and you allocate your demoted inventory to any kind of third party reseller, you no longer control how that inventory is packaged and sold -- and, like the case of Videoegg among many others, you feed your own price erosion.
I read that display-advertising spending is poised to rise (display spending accounts for roughly 20% of the overall online advertising spend). Branding-based advertising will likely drive that expected increase and I suspect more publishers not less, will fail to capture the true value of the exposure they sell.
To prevent this from happening, online publishers have to relearn the laws of supply and demand to understand that spinning off unsold inventory to another sales channel doesn't limit supply. Instead, publishers must obtain a true quantitative handle on demand for their site and take tangible steps to reduce supply in order to increase leverage for their own sales team. One such step is to remove some of the ad units from their page views until the market demands otherwise, at a price that reflects a cost for branding.
This is just one approach to garner real value for the real branding that takes place on our sites. I am sure there are others -- and am equally sure when it comes to securing prices from buyers that reflect branding value, we're getting schooled.