Internet

Where Have All The CPM’s Gone?

Written by juicebox on May 30, 2008 5:13 am EST

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The unrealistic expectation of Advertisers and the dwindling experienced Sales Professionals at Advertising Networks is leading to a bust in the marketplace for many websites as CPM’s continue to fall to an unrealistic price range for website owners.

I can remember almost two years ago, where finding a CPM campaign on a network that ran for 50 cents, was pretty rare, in fact you probably wouldn’t find it. Then this roll of “eCPM” came out, which effectively crushed many websites, due to their Click Ratio’s on particular advertisements. CPM’s that were once $1 - $7 dollars, are now weighing in on average between 3 - 80 cents. Even Ad’s with eCPM’s of 0. Yep, i’m giving free advertising to a junk site, superb!

Combine this with the trend of larger, more robust websites, with a bandwidth cost that has stayed pretty constant over the years, and its all becoming a recipie for disaster over the web. So why should modern day Internet Marketers be concerned? Let’s explain in depth.

As a publisher in one of the major networks, as I login to the account, I see about 30 campaigns paying less than 10 cents eCPM. What are those advertisements?

Shoot The Duck for a Free iPod
Don’t Click This! You will die!
Are You Hot?

I think that gives you a basic idea. See, back in the day, it seemed that these Advertising Networks had something in common, let’s call them, Standards. Now, it seems that they accept any advertisement, but they really love these “consumer catch” advertisements, that create such a backlash on websites, and is leading to the reduced effectiveness of all the other advertisements on the internet, beginning a trend considered as “banner blindness”.

Banner Blindness is the theory that more and more web users are ignoring ads completely, if not blocking them with tools. As a publisher, this bothers me in two ways. One, that my ads are potentially being blocked, hurting my potential bottom line, and then the fact these advertisements bring down the quality of a website dramatically.

A good recent advertisement I noticed on one network is the “Conservatives In Action” advertisement. First, it is a horrible design. Be lucky if a kindergartner made that in Paint. Second, it’s flash based. Third, it’s offensive. Oh, their eCPM? Well, it started at 20 cents, but as more Publishers blocked them, it went up to $1.50 eCPM. Although to my knowledge 90% of publishers are refusing that ad for the fact its tasteless and in bad design, similar to the “free” ads.

Note: I am not endorsing nor slamming their message. I am talking on the overall composition of their ad.

I can understand that Ad Networks have a fill rate that they guarantee publishers, but I can’t remember the last time a Webmaster has really complained about the lack of fill, what I do notice though is many complaining about the lack of Real Advertisements.

Many of these “Free Product” and other similar sites that are advertised so cheaply are there for lead generation, and a horrible form at that. If I was one of the “advertisers” or “sponsors” on these sites, I would demand my offer be immediately taken down. Its Incentive-Based, which means my leads are of less quality. Unless of course your one of these mail-order companies that make it hell to cancel.

All of it is leading to a web where its going to be incredibly hard for publishers to monetize their websites and as the web continues to develop into more engaged media, a large consolidation may start to occur which will end up harming web users, and may reduce growth dramatically, if not the amount of time one spends on the internet.

Of course, there are still networks out there that can provide you with some pretty gangster eCPM / CPM. However, they tend to not accept social networks, or networks that generate high views with low clicks.

The Problem with eCPM
So, one of the major reasons has been the migration of the industry from the CPM standard, to this new eCPM standard, which guages websites based on their click through ratio, as to how much they should get for the CPM’s.

eCPM’s are equated down to this. Here, I put my sign in your front yard, but unless it makes me direct traffic from you, you get no revenue for it. Heck, even if that future customer got my company info from your sign, but didn’t respond back from you, you don’t get counted for it. Even though the customer was exposed to the message, and their subconcious responded by retaining it, that doesn’t count.

Its a way of turning that eCPM to a practical CPC, CPA, or CPL campaign without exactly doing that, since these Publishers have a CPM contract.

The Unrealistic Expectations

Many Advertisers over the years have been given unrealistic expectation of return, and only want to pay for the business it “directly receives”. Much of it can be attributed to the better reporting of ad clicks and views over the years, but how does it compare to other media?

Radio - You pay $100 - $600 for a 30 second audio ad, with no guarantee anybody hears it.

Television - You pay $400 - >$1,000,000 for a 30 second video ad, with no guarantee anybody hears it or sees it.

Newspaper - $100+ for a small 2×3 advertisement.

These mediums charge on a CPM style basis. The more their estimated base, the more they charge. For Radio and Telvision they charge during higher periods of increased consumer access (prime times).

What do they provide you? Exposure. Those prices, are considered a deal in those mediums. Now, let’s go back to the internet, where a properly designed ad can expose a customer to your web address and message for anywhere to a few seconds, to several minutes. $10 CPM for it? What a deal!

The Problem with CPA, CPL, CPC

Obviously, there are many websites using these different forms of advertising very successfully and making a ton off them, however they don’t work for every site, depending on their viewership.

The other issue, is that CPA / CPL campaigns lead to these free product websites. Sure, many of them are legitimate, but many more are not. In addition, how many actual conversions stay with the advertiser after they obtain them? Very short. Let’s say your Columbia House, and you were sending out all these 12 CD’s for a dollar thing. Those cost you more than a dollar. Now before these customers even get the first shipment, they are cancelling, and now your out the money you gave to the site for providing you the lead, and what you sent out. Not too bad you think, then it happens thousands more times. Now that campaigns not looking all too interesting, is it? At least in my eyes, that would be a money hog, and I would take it out of my advertising mix.

Overall, companies advertising on the internet need to really consider their options when they go to advertise, and consider the potential of their advertisements, instead of demanding unrealistic results. Getting your name out there, is more important than getting an immediate sale. The more you expect and the less you want to pay for views, the more websites that are going to popup with pointless, irrelevant content with one purpose. To make an acquisition, and that’s it.

If you are a publisher on an Ad Network, make a strong message, and keep campaigns out that have bad content that you feel shouldn’t be on your site. Take out those campaigns that make you under $2 eCPM or CPM. The more the Ad Networks see this, the more they will have to focus on getting better advertisers, and filtering out the junk. Any Ad Network who touts their Ad Fill more than anything should begin being reconsidered, because their focus isn’t on quality content to compliment your website.

What are your thoughts on the CPM? I’m interested in hearing both Advertisers and Publishers views on this subject.

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