Commentary

Talking About A (R)evolution...

As 2009 takes hold, we've been growing philosophical about the accelerating rate of change in online media brought about by this economy, and its implications for performance marketing.

If you're anything like us, you're not succumbing to negativism; you religiously continue to rely on your solid online marketing fundamentals to help moor you through these unprecedented times. And because you have to be, you're more open to new methods and new models than you were before. A pundit recently said: "Survival is the new success." We can all do better than that.

In these times of "deflationary expectations", when the established online advertising standard (guaranteed CPM) is no longer the operative principle, only the agnostic performance marketers are equipped with the flexibility to miss looming extinction or at least, major decline. The prevailing theme seems to be "Change or Die!" It's all quite Darwinian.

It's not that the CPM model is inherently wrong. It is just not realistic for 2009's conditions. Witness the deflation that's already occurred in email pricing -- many lists are available at 40% less than last year; others are working on a rev share basis. List pricing is directly reflective of consumer response: if consumers are avoiding a category, CPMs must fall in synch.

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Remember the Discman Player? When you occasionally still see someone on the subway with one, you think to yourself, wow, not too long ago (the mid-to-late '90s) that big-ol' clunky thing was state-of-the-art... as you glance at your tiny yet powerful mp3 player. The standard CPM model has become the new big-ol' clunky thing.

Of course, no one foresees the complete demise of CPM. It's really more about evolution or adaptation. When conditions change, successful species adapt. Everyone knows conditions are changing rapidly, and marketers will continue to demand greater and greater accountability from all media. The CPM-based media species that will thrive are those that will integrate the best elements of performance with what they already do best.

Traditional CPM simply cannot cost-effectively enable drilling down to the finite data needed to construct composite profiles to optimize campaigns and ultimately lift conversions. Performance models, however, provide the flexibility to test your way to optimization.

Recognizing this, some media players are sparking a trend toward hybrid models: a lower, but guaranteed base CPM with a performance kicker. If your agency isn't negotiating such adaptive deals with media, they should be.

3 comments about "Talking About A (R)evolution...".
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  1. Jaan Janes from Yieldbot, January 15, 2009 at 4:53 p.m.

    Agree as we don't see any sign of a slow-down on our Pulse 360 sponsored links ad network...our advertisers continue to buy CPC so long as we meet their CPA goals and we continue to work hard to ensure we match the right ads with the right consumers on all our publishers like MSNBC and Gannett Digital.

    There is an absolute role for CPM forever - but performance based marketing will continue to grow quicker as it's brutally efficient.

  2. Chen Wang from Ninah Consulting, January 15, 2009 at 4:56 p.m.

    I think it is only in those areas where performance metrics are rock solid (particularly when media exposure can be tied directly to transaction) one should feel completely comfortable in revisiting the traditional CPM model. However, to change the media buy structure when the ULTIMATE objective of the campaign is less measureable (i.e. brand elevating type) needs to be done with caution. Of course we can always use CTR, but I guess there has been enough discussion regarding using click as the only benchmarking metric.

  3. Richard Markus, January 15, 2009 at 6:51 p.m.

    Performance as a category has a real opportunity in this economy, no doubt.

    Publishers with meaningful traffic, however, will vigorously defend CPM or some hybrid that allows for a minimum and somewhat predictable revenue flow...as meager as that may be in 2009.

    Ad impressions contribute to brand marketing, period. Failing to value the impression wrongly dismisses the value of the publisher's site and content that brought that user (often again and again) in contact w/the ad.

    Performance demands that publisher not only bring the horse to water, but make him/her drink.

    Models may evolve, but to try and put a performance burden completely on one end of the media chain (advertisers) or the other (publishers) is not sustainable to the business ecosystem.

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