According to a recent opinion piece on E-Consultancy, the online marketing community, with vast amounts of online advertising inventory available due to the rise of broadband, increased competition, dropping response rates and a limitless supply page impressions, many online media owners – and that includes web startups trying to sell advertising – are seeing their display advertising CPM rates plummeting to as low as £0.50 CPM. Long gone is the day of being able to charge £20 CPM for broad run of site display advertising. Er, yes, you could say that. Apparently advertisers now want increased flexibility and new formats in order to protect margins.
So with inventory over-supplied, millions of impressions are going unsold every month and CPM rates have inevitably fallen, hitting margins. We are told that Rich Media, in-stream video, “Page take-overs”, podcast sponsorship, advertorial content and mobile are going to come to our rescue.
But this is basically a joke, right? Is there really any point in continuing with the ridiculous over-emphasis on CPM? The problem is only going to get worse. What we have here is hyper-inflation. And page-takeovers? That will really get the users clicking. Clicking away.
As the Wall Street journal reports Google is having a harder time than it expected generating ad revenue on social-networking sites. But there is a clue to the answer here. MySpace’s ‘hyper-targetting’ systems (targeting ads based on the users’ profile) are working out well. Other sites and other systems will improve on this, especially in the mobile arena. So the implication here is that it is not more inventory we need at the moment, but better and better targeting, and more advertising based on action and interaction not on CPM. Or am I wrong? What do you think?