Appreciate the thoughts. We run an educational site and are struggling with ways to minimize/cut advertising by relying primarily upon premium services for revenue. Advertising is often anathema in educational circles, so we are particularly motivated to figure this out.

Bean counters obsessed with what they can measure need to get a clue. What matters is RESULTS (conversions) and the most important factor in driving results is RELEVANCE!

Shelby,

Great article. I couldn’t agree more. Our magazine has been in publication since 1994 and today, everything is CPM, CPM, CPM, whether it be for online or print ads. As a niche legal publication, we have a fairly defined (and small) market so CPM shouldn’t be the end all be all for ad decisions/budgets.

Ugh, I disagree here in every way.

The internet has given us so many confusing metrics to evaluate “real time” how advertising brings in sales, but those metrics are ALL false.

You can not put a price on advertising and get a realistic understanding of what that advertising does. If you’re a tiny outfit selling a niche product, I believe that advertising conversion metrics is an easy-to-understand value.

But if you’re a large-to-huge company, how do you really judge how your repeated advertising costs not just bring in fast sales but also bring you a reputation for the long run through impressions in people’s eyes? Does a Chevy commercial really sell a car? Of course not — not often, at least. Does a Microsoft ad have people running out to purchase a program? Probably only rarely.

Advertisers know they need a budget for advertising, just for reputation purposes. Advertising works. CPM is just fine for this purpose, and I would say that for large advertisers, CPM is way more important long-term than CPA or CPC. I hate CPA because it is unrealistic except for niche items you’re selling to a niche crowd and hopefully you’re timing your article for exactly when the customer wants to make a purchase. It’s not a realistic way to provide income when you have a consistent crowd (think: Quantcast statistics) over a consistent period of time.

You should link directly to Cost Per Impression. I for one didn’t know which CPM this article was referring to at first.

http://en.wikipedia.org/wiki/Cost_Per_Impression

But maybe I’m just simple that way.

Awesome post. Having worked with a PR/ad agency, I can testify personally to how the CPM approach limits creativity. The key problem is that managers have the equation stuck in their head: CPM = ROI. But it’s not that simple, especially when you add social media engagement to an outreach campaign.

At Harris Social Media we are tightly focused on aligning metrics with core business goals. In particular, we are looking at ways to measure brand equity independent from conversions or impressions. When we have a robust model of brand equity we will be better positioned to measure the ROI of long-term social media strategies.

CPM = ?

This is an argument I have been making since 2004/5, CPM is flawed in many ways.

Pricing can only go down
CPM as a model from a providers point of view is just a downward spiral. As you say eyeballs for eyeballs, if someone else can generate the same eyeball cheaper you’re done. There is very little game theory going on (to hold prices up) as the supply is virtual endless.

Infinite Supply
There is a seemingly infinite supply of impressions and relatively to a client it may as well be infinite. This does little to establish value and thus drives down the price.

Tiered Pricing
The split between Premium and Standard advertising is still ill defined. Premium is simply a website locked into a network that demands a fixed price (even as we have seen they will drop the price) and standard can be anyone.

How could you create price discrimination here:
– Brand recognition
– Ratio of content to advertising (analyse pixel count)
– Driven by continual surveying
– Integrated Behavioural Advertising, send the impression at the right time (ie 2 sites after visiting TechCrunch). Again probably still too big of an ask till there is an international industry body.

Impact of an eyeball
When we are talking CPMS I like to compare it to a billboard, sometimes you have a read, often you won’t notice it for months and some days 1000 people drive past others 500. You don’t know anything about them, what their intent is (ie going to work vs going shopping) etc etc. An eyeball at certain times of the day should be more valuable than at others.

Need I continue? I think the point has been made. What can be done?

1) Greater technology around differentiating websites and their visitors. By automating this you can provide an impact score. (that’s if we want to keep it).

2) Kill the metric, move on
A swap to CPA, Cost Per Action provides a better baseline for improvement. In my experience this is heeded by:
1) Lack of definition around actions
2) Actual implementation of measuring actions
3) Benchmarks. Small business doesn’t know this stuff or has the capability to measure it. Large enterprise is a different story.

Like the prod, time to knock CPM on it’s head.

@ Glenn

CPM = Cost Per Thousand impressions

There is supposed to be some innovation in this area now that Adobe has acquired Omniture, especially in monetizing video content.

Thanks for the quick left turn out of the traffic mainstream. People will forever gravitate to what they know, even when its not working anymore. We all regularly need a swift kick in the rear to get us out of the repetitive grove we dig.

I recently ranted about the lack of understanding of social media and measurement on my personal blog and touched upon the importance of the engagement metrics you mention. But as you know changing the process of the media planners and buyers is very difficult and will take a long time…especially when it makes it initially more difficult to compare campaign performance. However, there needs to be a transition to get to what you suggest (which I believe you are right about).

What if there were some method to equate a value assessment of an action (share, RT, etc.) that can be equated to an impression? One share equals 10 impressions (or whatever). Then add a couple new measurements (engagement, brand equity??) which those actions contribute. Just thinking out loud here…your article made me do it :-)

Shelby, what you’re saying is that we need a simple solution to this “problem” of CPM, but discount CPC and CPA as possible solutions–we need something new, you’re saying. Ok, what about a combination of CPM and CPA? That way, the ad network or who ever owns the distribution channel has an incentive to deliver quality, targeted Ads, while at the same time they are able to reap some of value provided for placing ads in front of prospects. Your thoughts?

If this isn’t a possible solution, then what do you propose? I mean you seem to be arguing against using anything that’s standard to ad networks these days (CPM, CPC, CPA). I get that you want spur innovative thinking on this subject but how “creative” can one get when it comes to the pricing model for ads?

cost per thousand impressions. e.g. $10 CPM means advertiser will pay $10 for every 1,000 impressions of their ad

I hope Shelby won’t mind if I jump in here for a minute – and I hope he will reply as well as I am VERY interested in what else he has to say on the points you bring up.

Let me introduce a larger perspective on why CPM is such an issue online. It encourages the greedy to continually increase opportunities to sell worthless impressions.

THAT is one of the major failings of the current Google AdWords system. Where once it was the advertiser’s greatest asset today it swings widely between quality impressions that convert at a consistent rate and garbage traffic that doesn’t convert at all.

Advertising MUST focus on what is best for ALL parties involved if it wants to be a stable business. You can’t gouge your advertisers by selling them junk advertising impressions. You can’t continue to bury the public in what we will continue to learn to tune out.

All wise decisions must be SUSTAINABLE and increase credibility – not kill it!

Advertising must sell RELEVANT ad space in a way that consumers are interested in viewing so that businesses can generate a positive return on their ad spend.

The opportunities are HUGE for Social Networking Media and individual publishers to offer HIGHLY relevant ad space so that readers WANT to see those ads because they are interested in what they offer.

I wrote about that some time ago hoping that one of the major Social Networking sites would pick up on the idea. StumbleUpon came closest to having the content optimized for relevant advertising that WILL convert extremely well. I’ve linked that post to this comment so those who are interested can better understand what I know from experience DOES work.

I agree with the article 100% however I can’t help but notice how many ad units are on this page!!!

First: Everything he says is true. But!

There is no other way to sell ad views than views.

Whether flawed or not there isnt a proposed solution in his rant and the measurement of results is the basis of valuing advertising.

CPC CPA CP_ doesnt matter. All that matters is that the advertiser FEELS that they get what they want.

I agree. There’s tons of ads that have visual value, and many that I’ve actually enjoyed watching/playing that I remember to this day, without clicking on any of them. Apple, Anheuser Busch, Orbitz and others know what’s up.

Great article. Whether you agree or not, Shelby makes some tremendously interesting points. Regardless of whether CPM advertising should be KILLED I think at the minimum, innovation for NEW types of web advertising that are more engaging are badly needed.

I think the real fact that needs to be stated is that display advertising of any kind is not as effective as previously thought.

Back when people were buying print, they knew the circulation they were hitting but really had no metric for seeing how many were looking at their ad or making a call to action on their ad.

Now its very obvious who has seen it and if they are interested enough to click through to view more information.

The numbers from the click through rates cannot be pleasing to anyone but I think this is just an eye opener of what they have always been getting.

And how about television ads since the advent of DVRs and TIVO. Nobody is even watching the ads anymore.

So today’s marketers are going to be more sophisticated and most likely more conservative about what they purchase and I am not sure this is good for the advertising game in general.

Advertising as we know it has to change and it is definately going to take some creative people if it gets led to a different level.

Worst part about CPM, the self-refreshing page (more pageviews!). Good Lord A’mighty. Present company excepted, I love all the constant refreshing here.

I always prefer CPC to CPM, however if I am working with a client that has an online advertising budget in the 5 digit realm I try to push monthly sponsorship programs on websites that meet their target demographic. Banner ads are prooving to be more and more ineffective as people simply “tune out” this form of advertising. Advertising with rich media, particularly pre or mid roll in video ads has the largest amount of effect.

I discuss many of these issues on my blog at http://blog.tonangi.com

Excellent Article. It is however a little ironic to count no less then 14 CPM based ads on the techcrunch page that contains your article!

At my company PracticeFusion.com we are focused on giving advertisers CPM opportunities that target the ads directly at the user segments they want. We do this by understanding our users demographics: Doctors and Nurse Practitioners, their specializations, geographic area, etc… and the further by understanding the patients that they are treating. With this data we are able to display ads that are extremely relevant to decision maker (the doctors and patients).

The next step for us will be able to provide information back to our advertisers that help them understand the effectiveness of the ads displayed.

The overall industry use of CPM does get in the way of advertisers ability to understand the value of targeting. It’s incumbent on us as publishers to make sure that we continue to push our products to offer more and more metrics around effective targeting instead of just more and more impressions.

I agree entirely!! CP/M was an excellent operating system for it’s day, but those days have long gone.

I’m surprised the author didn’t mention the lack of hardware support for CP/M on current systems, nor the lack of a graphical interface, as it seems that these two points alone would make the argument – without ranting on about a number of terms and concepts which seem to have little to do with computer operating systems such as CP/M.

CP/M is dead – Linux or Windows are without a doubt the way forward!!

Excellent Article!

The problem is not the metric as such. Smart advertisers already have their cost per action, cost per acquisition and so on. They optimize media buys based on their own metrics, CPM serves only as the lowest common denominator from which all other costs-per are calculated.

There are many dimensions to display advertising, many more than for search. Technology should be key to managing this complexity. Publishers should show some accountability over display campaigns, but most of them simply can’t — they all use decaying 15 year old ad serving technology.

It’s a fun, sensationalistic blog post, but you’re confusing the fact that CPM is a RATE type, not a MEASUREMENT!

Smart marketers set specific measurements they need to meet/exceed for their campaigns, and negotiate the rate on that basis. Whether the campaign works or not is subject to all the factors you describe above, but NOT because the rate type is CPM. Cost/value analysis can and should happen regardless of how the campaign is being billed.

It’s in the area of measurements where innovation must happen, and indeed it is happening. But eliminating CPM as a rate type will not fix the problems you describe.

I think some for of CPM can still work if there are some metrics for evaluating quality. Things such as: time on site, Ad clutter/density, and Ad position (above or below the fold).

For sites like TC the purpose is the content and really none of the CPM Ads are relevant however from a branding perspective they do have some impact. Having said that in the case of TC other than RackSpace Hosting every other square banner feels like obtuse logo branding and I completely ignore them. The locator guy has more branding impact than whatever that (mt) ad means. I think if the ads themselves were a bit more engaging or clear as to what it was that was being sold I would be more interested.

Cheers – Eric

“if they just want impressions, why don’t we go from four ads on a page to eight”

Techcrunch, is this you???

Like most things in life, you cannot change something by just asking politely. “First, just stop using the CPM. ” isn’t realistic although I agree with your other suggestions for change.

You mention that all of the flaws with CPM but It isn’t like other types media ad measurement don’t have the same problems. Ads in magazines are sold on circulation, no way to measure whether someone is opening up to the page in the ad and looking at it or not. TV and Radio the same, you can’t measure whether someone is actually watching or listening. It is the same fundamental problems with any type of advertising.

It comes down to this, if the agencies and the brands that do all the spending online decide that they want something different then CPM, publishers will adapt.

I think what Shelby is really trying to get at is that the industry needs to look at different ways to advertise on a site, not just banners, pre-rolls, and ad overlays. What we need to do is think of innovative ways to engage users with the advertiser’s dollar and input.

Let’s say you have a section within your site on dog training tips. Ad sales would almost 100% be focused on a few banners around each article, hopefully having to do with some pet products. But what if we were able to have some more creative freedom with those ad buys? Have an advertiser sponsor the content, link directly to a dog training product within, and at the end, of the article, do email blasts that are sponsored by the advertiser, offer custom links that link directly to a product.

Publishers and advertisers need to be willing to work with each other on semi-custom campaigns. By focusing primarily on CPM and CTR’s, banner campaigns will continue to decline. The future is in becoming strategic partners with an advertiser, and finding ways to make it a win-win for both.

Could not agree more.

The biggest problems with online advertising today:
1) Media buyers expect ‘big custom’ packages thrown in for free, and the banner CPM’s become the ‘currency’ of ad buys.’

2) Lack of relationship between Media Buyers and client Marketing department leads to piss-poor availability of assets for custom development.

3) The necessity and desire to get ‘in between’ a reader and his/her content, rather than supplement or improve the content experience.

I agree that all impressions are not created equally but CPM is the not the problem. It’s the obligation of marketers and publishers to understand this and put on the constraints. A few ads or even one large targeted ad is more effective then many irrelevant ones that should be obvious.

Jordan, you nailed it.

Really really good article.

“what about a combination of CPM and CPA?” -> this is “click through” at Googlephere

Amen. I’ve been preaching this for years, so it’s good to know that perhaps I’m not an insane person. Perhaps.

Here’s an analogy: CPM is like measuring your car’s gas mileage in “Songs per Gallon” — if you listen to classical music (where songs are 20 minutes long), you have a really crappy mileage. But if you listen to the Disney Princess CD (average song is 1:45) then you suddenly have amazing gas mileage! “My car gets like 40 songs to the gallon!!!” The numerator is just completely nonsensical.

Same thing with the “M” in impressions: If I look at a picture of someone on Facebook, that is the same “M” as if I spend 8 minutes reading an in-depth New York Times article.

The relevant metric is “Cost Per Seconds of engagement”, which even lends itself to a friendly TLA. If I engage with an ad unit for two minutes, that is 120x as valuable as an ad that I glanced at for one second.

Here’s what exciting: This kind of “CPS” model would have been infeasible several years ago, but with the speed and ubiquity of today’s JavaScript engines, it is actually possible to measure how long a user views an ad, how long they mouse over it, and how much they interact with it.

Of course, it’s going to take a lot more than me, Shelby Bonnie, or even the entire TechCrunch readership to change such an entrenched standard.

But Kudos to Mr. Bonnie for trying.

Thanks for the great article Shelby. I agree with you on almost all of your points and I think after reading through the many comments, that some haven’t grasped that you’ve identified a broken ecosystem that’s bad for publisher, advertisers, and most importantly consumers and not just a broken way to sell.

The impressions-based model has led to an amazing number of extremely poor quality sites that as Shelby mentioned, have no real value outside of trying to achieve a Google SEO rank and then drive eyeballs to the page where they then use ROS ad network inventory to make a buck. Users click through thinking they have found something relevant only to find that it’s nothing but a paragraph of content (copied from another site in many cases) and a page full of ads. How many of those ads do you feel actually resonated with the consumer? More importantly, how do you think the consumer viewed your ad in light of their experience? The CPM leads to a shotgun approach in the industry where we try to hit users with as many ads as possible and hope that they get a cookie and then count as a conversion in someone’s spreadsheets. If you deliver 10 billion impressions, you’re sure to hit someone who was already going to convert.

From a metrics perspective, a lack of real progress in delivering a universally accepted way to measure the value of display inventory has continued to bring the CPM levels down to dismal levels. The only way you can get premium CPMs now is to either command premium audiences or to do a very IN YOUR FACE approach to the creative execution on your site in order to justify CPMs that are 10-20x what an ad network will give an advertiser.

CPC and CPA provide actionable and more accountable metrics, but as Shelby notes, only in limited situations where you’re in the purchase path or know what you’re trying to accomplish. The way humans make choices is a much more complex equation than most advertisers are measuring today. CPC/CPA ads reward the last click or last view, ignoring all prior exposure to media both online and offline. For large advertisers not in the online space, how do you determine the value of an impression if your product is bought at a brick-and-mortar retail level? How do you separate what you’re doing online with the national campaign you’re doing offline?

I think the general idea is that if we move away from CPM, we would see more of:

1) Quality publishers with better content, not just more – More impactful ads delivered at the right time and right place which is a triple-win.

2) More meaningful connections – Some of the most lauded campaigns in recent years have delivered more than just impressions to users. Delivering entertainment (subservient chicken), challenging conventional views (dove campaign for real beauty), and finding ways to connect to a consumer in a meaningful way is more valuable than just pitching them a message. This is what I think advertisers should pay for and it’s not simply throwing a placement and CPM on a media plan, it is actually understanding WHO your audience is, WHAT you mean to them, WHAT you stand for, and HOW you can make that connection.

The article raised many questions- but ended with no answers, but even more questions.

CPM will never go away, because marketers have in simplified terms, two objectives when advertising: (1) To create awareness/top-of-mind/brand equity, and (2) to drive a sale.

CPM is the appropriate metric to use when the goal is to create awareness or maintain top of mind. People don;t go out and buy a BMW every time they see one. But each BMW ad they view reinforces their impression of the brand, and due to the recency effect, when they do decide to pay a luxury car, they’re more likely to buy a BMW than some brand they haven’t seen advertised for 5 years.

CPA and CPC are more relevant when the marketer’s goal is to drive an action. To imply that CPM is useles is to ignore the fact that brand equity is enhanced every time someone views your ad- even if they don’t buy imemdiately.

Granted, the mere fact that an ad is displayed doesn’t mean it was viewed- or even noticed. But you could say the same of a billboard. So I agree that pure numerical CPM can be a waste of money.

The middle ground is not to abolish CPM, but to use tech to count only impressions that were noticed, not just those that were displayed. As annoying as they are, those ads that you meet on some website’s landing pages which you have to click through meet this criteria.

http://www.amusis.com

Your premises have fallen flat in my mind. Before even establishing a reason for change, you communicate how that change should be carried out.

Bottom line, the question I would like answered:

How does dropping CPM make me more money as a publisher?

This post is about 4-5 years obsolete!

The days of big branded advertisers on the web buying up unmeasurable impressions are over. For an ever increasing number of online advertisers, everything backs out to a CPA (or CPC) or some other quantitative measure they deem appropriate to theor campaign. The CPM is just an exchange rate, but every advertiser backs that out to a metric that makes sense to them, CPA or otherwise!

No Tech Crunch would be from 8 to 15!

[...] TechCrunch just posted a great article about another negative aspect of online advertising – the [...]

“The ultimate losers are the users. They get a lot of bad content and bad ads. They are literally overrun by ads all day.”

Shelby-
Thanks for this. I fully agree.
Cheers,
Jon

The CPM should not be killed off. These types of blanketed always raises my red flags.

There should always be a hybrid of back-end goals along with the CPM — an end to end solution for effectively measuring the impact of your message and brand (like post click experience, data acquisition, etc..). But killing off the CPM for online is ridiculous. Impressions have value, impact, and it’s measurable. That’s a fact. If the creative execution is low quality, I have a difficult time connecting the dots to how it in anyway relates to whether or not the CPM should exist. The point is, the problem is else where. Maybe people don’t want to own up to real problem.

Thank you! Someone needs to come up with a Cost Per Action (CPA) methodology. Allow the advertisers to define the actions they want and or are willing to pay for.

This would create much more dynamic content for users and far happier advertisers. I tried out the Stumbleupon CPM model and thought it was a joke.

As someone who wants to sell product, how does flashing my page to someone who is “stumbling” around EVER going to generate a sale. Pun intended.

It just doesn’t work. How about letting me define some actions or destinations I am willing to pay for and charge me when the visitors get there.

It may be less of a quick buck but longer term I would be more invested and willing to allocate a larger budget to these types of methods.

um cost per click works. As someone using google cpc, I am happy to pay for ads that people interact with and not have to pay for some nebulous concept like branding, or mindshare. Sure advertising is a cost of doing biz, but I want some measurable ROI for at least a portion of my expense. I have listened to many “account managers” try and convince me that just because the ROI can’t be measured to the penny, that I should not overlook the “branding” and “mindshare” I would gain and can I afford not to advertise?

I think content owners are afraid of CPC because they know that they would lose massive ad revenues since all the CPM money they get is really just smoke and mirrors. Advertisers have been conditioned to not expect any truly “measurable results from campaigns. I for one don’t buy it.

You’re of course right, but let’s not put words in his mouth. His point was not “let’s kill the pre-roll ad unit” or “let’s kill the boring display ad”, it was “let’s kill the CPM” rate type. CPM as a rate type is not the problem.

@ Defunkt Shirts — almost every major ad network out there will run on CPA. They will just back out an eCPM and your inventory allocation will be dependent on how well you convert.

Right, but the publisher wants to know exactly how much they are going to make and that is why they do CPM instead of CPA or CPC. If an advertiser does a CPM campaign through your site and they come back immediatly and by more you know the campaign was successful for them on a CPA or CPC. Therefore you may be able to raise your prices.

Really, what needs to happen is there needs to be one centralized database for all CPM ad locations and each ad space needs to be rated by a third party or advertiser. Is the ad above the fold? How many ads are on the page? How good is the content? Is it a social network where someone is updating their status and in no way paying attention to ads?

Very true. CPMs are increasingly becoming an exchange rate often representing the sum value of the entire campaign execution.

It will be some hard word to break traditions like bookings by CPM, CPC, CPA – it needs understanding of Quality and Market Mechanisms.

Many large advertisers still think in terms of reach and impressions. CPA and CPC create attribution problems and ignore the value of media at all points prior to the point of conversion. This is why search engine conversions are overstated because users are increasingly using search as navigation.

Let’s assume you are Ford and the new Taurus SHO is a pretty hot car. You buy an ad on some auto blogs and a user sees the ad and then goes to Google and types in “ford sho” and they see your search ad. Click on ad. Read through it. Click on “Request a test drive”. Conversion accomplished. Source of conversion – Google. This is how 99% of online marketers look at their online programs today – in silos or with primitive cross-attribution techniques.

I think what Shelby is advocating for is more integrated and valuable advertiser-consumer opportunities. Instead of buying a banner, Ford could perhaps sponsor a mini-site on an autoblog to allow users to play a Ford driving game or maybe a comparison feature where you tell them your current car and they will animate how acceleration, cornering, and the interior is differentiated (please pay me if this idea is used because that would be soooo awesome).

BUZZ. Try again.

“Pricing can only go down.” How can you even say this if you can’t qualify what the product or service you’re pricing is?

Pricing for generic views on a generic page with generic user metrics will likely go down and down and down — more people are writing crap on websites that have nothing but crap with no return user information. High supply of crap, low demand from advertisers = falling prices. I’d agree there, completely.

And, yet, we’re still in a relatively new market. In terms of the REAL supply of accurate, informational and even profitable (for the reader) information, there’s still an entire market waiting to shake itself out. Advertisers WILL and DO pay more for viable user information — Facebook ads prove this time and again (prices in the markets I advertise in have been going UP, not down!). CTR isn’t as important as it was because you can also gain impressive value just by creating an advertising campaign that gets people talking about the campaign. How do you value that?

I’d say that CPM rates in some markets will go up. I’ve seen that cases repeatedly, even in a market where advertising dollars en masse are falling. Just because an entire market is falling in prices doesn’t mean that some parts of that market aren’t increasing in prices.

Why do we have so many bad sites that republish the same junky content–content that’s often made by machines or $1-per-post contractors?

If you’re going to attack Maholo, please have the courage to do so directly.

What if the action isn’t measurable right away? What if the profit gained isn’t financial but emotional or conversational?

Company A creates an ad campaign that has people talking. This generates more news/PR for the company. Over a period of time, that may increase sales for the company’s product outside the scope of even the product they’re selling.

Company B just goes out and buys CPAs. Content producers don’t realize a reasonable profit because they’re getting paid only based on an action (a purchae, a sign-up, etc) and in some cases, that action may happen beyond the time-limit of the contracted terms of the payment. This causes the content producers to not even want to bother accepting those ads, which has the added effect of Company B not getting the long term gain that Company A might have by creating a fun, attractive and popular ad campaign.

Coke ads never made me get up off the couch and buy a Coke, but I’m sure the branding goals were met. They maybe paid $5 million for a campaign that sold an immediate 50,000 Cokes, but how many more were sold because the name/logo/etc stuck in the person’s head?

If we killed the CPM who would have paid for this article? Everyone has grown-up with a free web and free TV media in the form of NBC, ABC, CBS. How many websites do you visit vs how many magazines you subscribe to? If CPMs go away publishers in my opinion are left with 1 option: subscription. I wouldn’t be willing to pay for 50+ subscriptions (number of sites I visit), would you?

Also, take the first step and remove the IAB Leaderboard you have at the top of GiantBomb. Maybe you are and have plans to do so very soon. Until then it seems like a double standard to say we should kill the CPM yet you aren’t being the leader and doing what you preach.

From one Wahoo to another, couldn’t agree more. In fact earlier today I received the “dreaded spreadsheet” from an agency.

I would have loved to have read this post but I was too distracted by the 18 shiny ads all over the page.

linkfluence.net might have a good solution for it. They monitor the links between website to create “maps of influence” (an sample is showed here : http://labs.wikio.net/wikiopole/ ) I’m sure they aren’t the only guys to do this kind of stuff.

That said : a wiki centric with & open source apps MUST (ok, should) solve this problem:

3 reasons for that:
- the problem is share by ALL the market (publishers AND advertisers)

- the marketeers would receive more by giving away their knowledge about a limited number of web site than they could receive if they kept this knowledge for themselves, they know that their knowledge have a value Only if it is aggregate –> therefore a “wiki” approach should work here

- there is a technical need to monitor “spreading” of information over the net, and this is a Real challenge for researchers –> therefore open source software can work here too: this is “THE” challenge of today’s internet!!!

What do you think guys?..

Hey Shelby! Right on! CPMs may not be dead yet, but it should be obvious to everyone that they are dying… so, yeah, end the suffering! Euthanize CMP!

Having worked at P&G for over 10 years in marketing I can tell you that when marketing a product a Brand manager cares about 4 things:
• What % of the target audience did I reach?
• How long did they engage with my brand?
• What were the resulting brand equity attribute lifts/declines?
• How much product was purchased as a result?

It’s that simple. Yet the current measure of success is how many ad impressions were served and what was the click through rate. Those two measures don’t answer any of the questions above. So as Shelby stated publishers get users to click through as many pages as they can and make ads intrusive enough to get clicked on better than the average but not too good because they don’t want to lose the user.

However, killing the CPM won’t solve this problem nor can it realistically be done with the way he describes it. The “movement” will have to be lead by one of the big players in the space. My guess is that movement will be lead by Facebook for the following reasons:
1. They have the most to gain by moving away from the CPM and CTR model (cause it doesn’t work for them today)
2. They are small, private, motivated enough to try any revenue model – The portals cannot experiment too much because they have public shareholders to answer to every quarter
3. The portals will follow very quickly because they are all watching to see what facebook does with this massive audience

Any healthy market has supply and demand in balance. You can’t produce more widgets than there are widget buyers. The fundamental problem with the current pricing mechanism married with no natural constraint is that our widget factories are dramatically over-producing impressions relative to demand. It has led to complete commoditization (sp?) and favors the low-cost content producer versus the best quality producer.

Publishers will benefit if we can move to some pricing system that has supply constraints and leads to a healthy market.

I am happy with any means for killing the CPM. The reason I said movement is that it will be killed if it goes through committees. When we changed the Ad Standards back in ’01-’02, there was a small group of industry players who met, joined hands, and jumped.

We recognized that if we tried to do it and placate all the different agendas, we probably would still be working on it today.

Facebook might have the clout to change the game alone and that would make me the happiest guy in the world.

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Great article, excellent comments.

It’s interesting that the majority of those commenting seem to be professional CPM crunchers (their comments are as long as the article itself – CPMs for comments anyone? :))

I like the term direct-response advertising. This is what I would sell – when I have something to sell, eventually.

“I have been in the Internet media space for 16 years and will start by stating the obvious”

Indeed let’s start by stating the obvious. You weren’t on the web in 1993. Neither was CPM. The domain cnet.com was only registered in mid 1994.

http://groups.google.com/group/comp.infosystems.www.users/msg/9a210e5f72278328

Mosaic wasn’t even released until Oct 1994.

16 years huh?

.. what?

Your argument is invalid. When you pay for a billboard you don’t pay for views, you pay for the site for a certain duration. It’s the same on the web excepts that days are replaced by CPM.

Great post Shelby. I’m so excited to hear this from you. So many thoughts to add, but after reading the comments I see things going in a direction that doesn’t really strike at some of the core change that needs to happen.

Specifically, measurement isn’t as big an issues as the volume of comments seems to suggest. Media is more measurable today than it ever has been. Driving expectations pretty high.

Mainly what I draw from this is, as a publisher, creator, or manager, is to deliver value well beyond the expectations of the buy side, and it could lead us into the next era of online marketing. The concentration can’t be on impressions or clicks, but some action of value for the ad buyer that is not in discord with the goals of the publisher.

For example, CPC is lopsided in the amount of risk the buyer takes on and therefore ultimately not of value. E.g. the publisher has little incentive to avoid “bad” traffic.

Maybe a little overdue, but thanks for posting this Shelby.

That was v1.0 unless I’m mistaken. I was using earlier beta versions of Mosaic in July 1994 — publicly available.

Great article – very Jerry Maguire! Maybe it’s not just time to kill the concept of CPM, but also that of ‘advertising’ in its current guise. Rather like the brave move of finally accepting that the ‘paper’ in ‘newspaper’ is no longer relevant in helping to define those publishing brands’ future, the term ‘advert’ may also now be redundant in the face of what is already becoming ‘participatory social influencing’ between brands and consumers, wherein one may perhaps look to a more positive future again because the pricing can be more geared to actual revenue based results and not just potentially irrelevant numbers of eyeballs.

I still think that the core influence on purchasing is peer consensus and strong brand value. The rest imho is just mud on the wall and currently feels like a bunch of random graffitti. User generated content will only feed user generated ad models, but bring branded content into the mix and then things get exciting. Humbly J

I couldn’t agree more!

Shelby’s proposal makes great sense. Lets start that movement to improve online advertising. Gather the Industry leaders in an open platform where they can invest and back up disruptive business ideas for online advertising. IAB could be the right place where the major players are represented, can participate and will benefit from it.

I would be happy to submit a disrutpive project that I’m working on that would fit perfectly for this movement. It’s a whole new advertising model that could become the killer best way to monetize social networks. The critical issue with this venture is that, to be viable, it requires a powerful and influential Partner in this industry to engage the leading Social Networks and Digital Marketing Agencies for a new standard in Online Advertising. If open source much better for all.

Shelby, I hope your article can get this movement started and IAB members will add on. I’ll be writing you for further discussion.

[...] http://www.techcrunch.com/2009/09/25/lets-kill-the-cpm/ [...]

What are you talking about? Think about Glam Publishers. You are going to put us all on soup kitchen line since we aren’t qualify for unemployment.

At my employer http://vast.com we deal with cost per thousand (CPM), cost per click, cost per lead, cost per sale, cost per action, cost per booking, and cost per membership. We collect this money from advertisers and pay our publishers like an ad network (or search engine, depending on which angle you view us).

The performance revenue types are dominating in our business whereas the CPM’s are almost now a rounding error.

My point? No need for a movement because it will just die its natural death, in the face of better models. And in fact, it’s a mistake to force the closure of a measurement system – CPM still can add value…just not from the advertiser’s point of view any more.

Jordan, I disagree. The advertisers I work with a consistent basis aren’t willing to pay more money just for good content. They have to be sold garbage ROS just so that the CPM is within the metric that they wanted to spend.

I could offer very targeted content to the appropriate client but in order for the publisher to get the business they have to order what becomes a competitive CPM.

This nails it. Unfortunately the client wants the value of all the crap impressions too.

http://lmgtfy.com/?q=cpm

Yes, however, widgets is a different product than desires. One is tangible, the other is not.

[...] O­rig­in­al­ po­s­t: Le­t’s K­i­ll The­ C­P­M (Te­c­hC­ru­n­c&#1… [...]

CNET was founded in 1993 and we were working with Prodigy, Compuserve and AOL — in that order :(

I read the article, then reread it and the comments a few times and I’ve come to the conclusion that this is nothing more than double talk.

I don’t care who you are, or what you’ve done, you can’t go and say you should get rid of X, or the market no longer needs Y because I said so.

CPC, CPA, CPM all work under certain circumstances. People pay these prices because they don’t know what they’re going to get and need a way of comparing performance from one place to another.

Impressions are valuable no matter how bad the site is, the content, the design, or even the creative. It’s been demonstrated time and time again that Paid Search and Online Media work together to drive better production. The line isn’t drawn on what’s pretty. Besides, someone only sees the ad because someone gets to the sit. If everything was so bad then no one would get there.

All of these changes require marketers to know the value of their visitors, the value of impressions to their brand and their bottom line. Almost no one does this. Few know the value of doing something today wll have on business in 180 days.

Ultimately companies will take time to figure all what a click from a search engine vs. a blog, vs. a portal, vs a social network, until then the flexibility of different pricing options will help better understand what to buy, when, and from where.

To call for the end of a pricing model ignores all of the steps which have to happen after the fact for a brand to know what they have, and how to get more of it.

In the meantime, the concept of ad exchanges should excite the author. It delivers online media with Paid Search efficiencies. Razorfish is doing some great things there – you can read more here: http://www.adexchanger.com/agencies/redefining-transparency/

[...] Funny enough, as I was finishing this article TechCrunch published a piece by Shelby Bonnie called ‘Lets Kill The CPM’ which I think comes to the same conclusion I have though via a slightly different route, and ends [...]

Fantastic piece. Coincidentally I just finished an article about advertising problems on blogs specifically but make a lot of the same conclusions. This is a very important conversation to have right now and I hope we have some new options in the very near future.

http://blog.seanbonner.com/2009/09/26/blog-advertising-is-broken/

Good discussion. I run ops for a media site, and I doubt CPM is going away. As many have pointed out, it’s a reflection of all the available information used to judge a site for a campaign into a commonly understood rate.

Previous performance, @Plan data, site clutter, SOV, brand … they help find the rate rate. CTR and conversions help refine it. I think it’s a fair model. An uncluttered site with a desirable demographic can price it accordingly with high CPM.

If you try to go CPA, you penalize publishers when advertisers run crappy creative. If you try to go engagment, you subject users to suspect surveys over and over. CPC invites click fraud. Behavioral is great but it segments very small.

CPM is a fair base measure when used properly, as most media agencies do. I know brand publishers who command $90-$100 CPMs for simple display, because of their audience and clean approach. And others that get pennies because they run crap sites with boatloads of ads.

Love the post. I’ve got to say from a designer/developer standpoint whose worked closely with marketing the internet feeds on the lowest common denominator. But to change the model would only bring 6 months of peace, the nature of the web is to adapt, qiuckly. The corners cut previously will be cut elsewere and I’d give 50/50 odds that the outcome would be worse than it is today. Granted, I’m beginning to like those odds.

I agree. CPM is still a factor that needs to be reviewed when forming a campaign, it must not be killed but what must be is the perception of senior people of internet is all about impressions.

We all have to explain to clients that internet is way far different from what the traditional tri-media they grew up with. Internet should not be reviewed like the tri-media’s viewership (like TV), listenership (radio) and readership (print) which are all synonymous to them for internet as impressions. Unlike tri-media who are one way ad communication, Internet is all about interacting with consumers and engaging them with the brand’s “creative” communication.

This is exactly the problem, Jordan. And it gets worse. We’re now regularly seeing “CPM” campaigns with performance clauses and 24-hour outs. This, of course, is really a CPA campaign in CPM’s clothing, and completely discounts any value that CPM might have been providing originally. Flat-rate sponsorships make more sense, but there needs to be a way to set and justify those rates (media buyers need to be able to convince their superiors/clients that the spend is worthwhile). CPA/Conversions are NOT the way to go, because they discount those that happen after the fact, and completely exclude any brand lift from the equation.

It’s a problem that needs fixing, but everyone — including the buyers — needs to stop being lazy and just going with the CPM. Very frustrating.

CPC works on *some* sites, but not on others. It depends on where the site’s content sits in the purchase process. If it’s at the end — i.e. a site that focuses on deals or something that drives the user to buy — then CPC is a great model. But if the site’s content sits at the beginning — i.e. a site that delivers news and information — people are coming to the site to learn, not to buy. The branding of the ad still works (in many cases better than the previous example), you just can’t judge much by the clicks or the conversions.

Prediction. Mark it here.

Most good sites (I don’t count FB as a good one) will move away from advertising altogether. At the current rates the advertising isn’t worth the aggravation and more importantly the money.

A site I know of just sent 30M impressions to google (worldwide) and got a check for 800 bucks. Meanwhile Google shows outrageous profits. A company built on advertising is killing the goose that is laying it’s golden egg.

But even that’s not the point. The real point is that sites had better find a way to move away from advertising for a lot of reasons.

1. Users don’t usually like much advertising.
2. Advertising isn’t paying enough to be worthwhile.
3. Umm it’s boring and users don’t like it and it doesn’t pay enough.
4. Umm, well you get the picture.

I recall paying 15K for a full page in a magazine that we wanted to sell our product in. We were lucky if 200K people actually saw the ad, much less CLICK on it. Today that 15K will get you almost 18 months of full run on the site I just talked about. +2M uniques and 10M pageviews… How does that make sense?

Why bother.

So my prediction is that websites will start dying off unless they find what opens a users pockets enough in order to pay the bills and take home some food. And if you are doing that, you might as well make your users happy and can the ad.

Hey that’s not a bad slogan “Can the Ad”. So there you go. If you are a website owner, or your company has a website and you are tired of the silly 3 digit checks you get for all of the massive number of users you bring, then put up a BLACK BANNER with “Can the Ad” in it…

See if the ad industry wakes up and changes the way things are done Take away those impressions and see what they use to eat. Take away those impressions and see how well the advertisers do.

So there’s a challenge to you all. Put up that banner in black that only says “Can the Ad”.

Wake up and Smell the Coffee…

CPM rates will not go up. As a market expands and supply outruns demand price drops. Umm basic economics.

On the other hand there was a bottom limit of what you could buy a 60 second ad for, and there is no bottom limit for CPM, since generally speaking the site does not control the pricing. That’s under near monopoly control of Google.

But let’s rip the real problem with what you are saying. 20 years is not a new market. :-) It’s mature, it needs to be changed.

Wake up and Smell the Coffee…

Nice article…. but the real value delivered to the advertiser is based on the type of people you are trying to impress … hence “impressions”. The letter “M”, by the way, simply stands for thousands outside of marketing circles, not impressions.

If publishers could control the display of ads toward a target audience, specifically businesses for B2B advertisers, then they would really have something of value to offer. Who wants to pay to try and impress someone that has no chance of ever buying? Apparently 95% of advertisers.

you guys clearly don’t know who you’re talking about. really. you don’t.

The problem is. That if you continually see that McDonald ad you eventually are going to think about McDonald, even if you never clicked it online.

So measurement doesn’t fully measure what an advertiser gets. I honestly would love to pay zero for impressions and only pay you for a click, because what I will do is stop running the ad when the clicks start creeping up. Because then I will know that my branding exercise worked. You see what I mean? I think publishers are getting gamed. BIG time gamed. Especially when you consider that some of the middlemen in this equation don’t own up to what cut they are taking…

Wake up and Smell the Coffee…

Problem is that essentially there are no constraints on the internet in terms of impressions. Just as long as users are spending time on the internet they will produce impressions for some site or another.

So how would you impose constraints and more importantly how would you enforce those constraints? Or are you talking about organizing the publishers in such a manner that they act as a single block and they dictate the pricing?

Wake up and Smell the Coffee…

(Just start running black banners with “Can the Ad” in then)

Young man… When I started on the internet (1979) I am not sure if you were even born. So Mosaic has little to do with what was going on content wise on the internet way before Apache etal…

Just because you were born way after the fact doesn’t mean there wasn’t a lot going on before you were born. :)

Wake up and Smell the Coffee…

Kill off CPM? Clearly the author has/had traffic that does not convert and advertisers are not coming back to him.

What other media buy is based on CPC or CPA?

Last time I checked, internet was the only advertising medium that can be tracked back to a sale.

When was the last time any of these methods were accountable for sales in the same way internet/digital were?

- Billboards
- Cinema
- TV
- Radio
- Magazines/Newspapers

All these mediums are booked on a CPM basis (although carefully disguised).

CPMS are going UP for good publishers and down for the bad publishers.

It’s obvious which side of the fence the author is on…

I agree that we should leave CPM as a standard, but CPC/CPA is for sure no alternative.

What you are failing to address is how internet both have the brand value of the print and TV and offers action in addition.

Customers should pay both for the brand value they get + the possibility of action. I certainly do not want to be involved in the risk of a failed campaign where we have no say in the campaign material.

CPM fails, like you say, because it limits our technical standards, which would benifit our readers.

So what is the solution?

1. Metrics like TV, but based upon surveys. TNS Gallup is trying to change the standard in Norway using surveys.

2. A new conversion factor based upon adviews and time on site (and also perhaps CPC added). I dunno the proper weight each factor should have though. Something for the IAB to figure.

Shelby,

Looks like you struck a nerve given the volume of posts. Here’s my 2 cents from the advertiser’s pov:

First, I am surprised that no ecommerce / direct response folks aren’t on this thread. Oh well, I’ll try to speak for the lot of them…

As someone who manages multiple online marketing channels, CPM has always seemed a fairly archaic metric. But what other choice do I have, the whole system is rigged in that direction when it comes to display.

As a retail ecommerce guy, I don’t do much if any display advertising as such. I really don’t care about brand equity in the traditional P&G sense. Gasp! Sorry, but I don’t. I also don’t care about ‘engagement.’ Neither do I care about time-at-site, page views, dwell time, form submits, etc. I care about only one thing. $ALE$!

It’s nice that some of you manage commodity brands like toothpaste and denture cream, but I’m directly responsible for selling stuff online — immediately. Unlike P&G, we don’t blow wads of cash indiscriminately on marginally measurable brand fantasy. We actually market, sell it and ship our products directly to our customers not some warehouse or 3rd party. And we do it profitably to the tune of 100M per year. And btw, we do little to no traditional ‘advertising.’ That is not to say we do not promote our products online. Quite the opposite. However, we do so very carefully and with a great deal of analysis and measurement. We do not optimize for brand-affinity, brand engagement, brand ANYTHING. We recognize that while brand is valuable, we also know that our customers are looking for value. Brand is a function of that over all value and user experience, not rich media games or online gimmickry.

Our metrics are:

CPC (aka Google) – i pay on a cost-per-click basis. Of course, there are many issues w/ this approach, but my returns are routinely in the 500+%. and 900% during peak season. Therefore, despite my annoyance with Google, until there is a better way to grab my customers at the point of sale, Google will have to do.

CPA – But let’s be clear – to me – this means cost per sale and is managed entirely on a performance basis via retargeting mechanisms. In other words, my media firm pays for the risk, and I pay a flat sales commission. Here I get all the exposure I need and bear non of the media cost. I only pay on what the banner retargeting program returns over a benchmark. There are also issues here w/ respect to appropriate sales attribution per channel and potential double counting of sales when you rely on multiple commission-based channels – but those issues can be addressed via intelligent, tuned tracking and metrics systems.

CPM – I have found this means of media buying useful –but only in the area of BT. As the other poster said, this is simply a way to get at cost basis that accounts for the Xchanges, networks, targeting firms and publishers. Even so, we are routinely seeing 30:1 returns. Why? B/c we know an a lot about our customers’ behavior. For us, we bid ONLY on the cookies that exhibit the profiles that we know have shown to convert w/in the time frame we are targeting.

CPM & AJAX

In an AJAX world, what’s an impression and why do we care about them anymore? Are we really forever tied to Web serving definitions circa 1995?

Moreover, the ‘page’ metaphor makes me want to gag. WTF is a page, anyway? Time to grow up and move beyond the Gutenberg print-analogies and realize that ‘pages’ have long since gone. What I want are CONTEXTUAL, SEMANTIC & BEHAVIORAL profiles of the location and the pathing of the user to whom I want to deliver my message. In fact, in many cases I don’t care what’s on the page itself. If I’ve done my retargeting well enough and if I’ve optimized my creative intelligently, I will generally see the return that I’m expecting. That is not the case with most CPM display campaigns.

I would consider bidding on the semantic associations from w/in the context of the ‘page’ content – in cases where I don’t have good enough cookie data but again, not on a CPM basis, but rather on a user-by-user basis Unfortunately, very few people are using OWL and other semantic tags making that impossible. Once there is a means to bid on semantic context + some modicum of user pathing history, I’d be willing to gamble on display. Until then, no thanks.

dont kill bill boards hoardings, nor tv commercials. google robbed off visual aesthetics from web.

we indeed like static graphics, and dont mind it dance onClick or onMouseOver.

CPC is the king.
Is no doubt about user action.
Is the principal purpose of the AD. To be clicked.

CPM goes nowhere.

Advertisers should name CPA and Adnetworks place those ads to maximize return for publishers (click through rate x CPA) and all happy.

Is not that how AdSense works? Why can’t be applied to banners and as a standard in the Internet where everything is measured and can be automaticly optimized on the go?

Can you really kill the CPM without something to replace it with first?

Actually the cost of a billboard does depend upon traffic — an ad in Times Square will cost much more than a billboard ad placed on a road in the middle of nowhere. So when you purchase time on a billboard you are paying for views.

Who to contact at Facebook? I tried to contact Facebook’s Monetization Team for a new advertising model that can become the killer best way to monetize social networks but no answer so far.

I like Shelby’s idea of an open source movement for industry leaders to back up disruptive business ideas from entrepreneurs to innovate in the Online Advertising space. It could help on adressing critical issues, like introducing a new industry standard, that can only afford big players or the whole industry. Maybe IAB could focus in that direction and start this initiative as all their members could benefit from it.

Some of you guys are flippant for no reason. http://www.break.com/index/the_internet_in_1993.html. In 1993 there were already millions of people on the internet.

Its not the CPM pricing model that is the problem with internet advertising. What is the problem is that banners, text ads, and other forms of non-search advertising does not work. Users are blind to them, they are overpriced, etc.

What DOES work is search. Which is why Google has a greater market cap than all other online advertising-related firms combined

Just differentiate b/w the content writer & the content publisher.

The publisher is stuck in the CPM/CPA world as it is now, trying to cover costs & make a return in an ever increasing universe of sites & pages.

The writer is spreading his content/meme, in this case a reformer meme.

Two parties produced this page, but that don’t mean they are of the same mind.

Not true. CPC is not king. You don’t really understand how ads drive sales, if you did you wouldn’t say that.

Yes, at the point of sale (google) CPC can make sense, but again you get into a value of paid vs. organic discussion and how SEO compliments/augmenents/offsets CPC expense. So in other words, the CPC “impression” actually drives SEO clicks. Therefore, your argument is blown to bits. In otherwords, I can use a high bid on a CPC as a form of billboard knowing full well that my SEO/organic performance is so successful that it more than compensates for the enhanced CPC price. Moreover, it drives the prices up for my less SEO adept competitors / affiliates. Good for me, good for Google.

Let me be clear, I am not against VIEWS. I don’t need CLICKS. What I want is incremental sales. However I get them is fine by me. Thus, I’d rather bid on PEOPLE not PAGES. Pages, absent a deeper semantic/ontological understanding are WORTHLESS. Literally, worthless. Why? Pages w/out people are irrelevant. Moreover, a user who is not in the market for ANYTHING is also worthless. So despite all the semantic intelligence in the world, if you audience is not buying, they are irrelevant to me. Thus, publishers have to start thinking like marketers and salespeople, not like ‘editors’ if they are going to secure my business.

If editors can’t attract ‘in-market’ people, then their content is crap. From a direct-response pov.

Granted, you might want to ‘plant seeds’ but that is a wholly different beast. That is true ‘brand building’ which functions in a world all itself. And realistically, the world of ecommerce/transactions are what drive the world economy. NOT ADVERTISING. Once the web woke up to that fact, I think that we’d see a more effective marketing/conversion scenario. Sadly, we are still stuck in the mindset that content is somehow valuable in and of itself. Sorry to burst your bubble, but NO IT ISN’T. Unless you can monetize it thru someone like me, it is a very expensive HOBBY. And that is true for the NY Times as it is for a random blogger.

I like this post, but heres some answers to your 4 points:

• What % of the target audience did I reach?

How do you measure this on an anoynmous medium such as the internet? You could do surveys, but that would drive people away.

• How long did they engage with my brand?

P&G is huge and they have so many brands its not funny. You could measure this by the number of page views or time spent on site after they click through the ad but this doesnt tell you much. It would be nice to know how long they spent looking at the ad, or if they seen it how long they spent trying to re-find the advert…

• What were the resulting brand equity attribute lifts/declines?

I think this can be answered by focus groups before making it public or asking people afterwards through surveys.

• How much product was purchased as a result?

This is difficult to measure again as you may not sell the product from your site but a retailer, how do you measure this increase and take into account seasonal trends? Perhapse “free samples” would be an idea but how do you measure this beyond the intial usage.

The other issue is that I would assume is that P&G want people to use a product for a long time to get repeat sales. CPM/CPC do not reflect this and CPA to a lesser extent.

Site A advertises a new razor, the initial month of CPA/CPC/CPM advertising increases brand awareness for the first 2 months. The product takes off phenominally through word of mouth, repurcahes, gifts etc. Advertising is pulled from websites because its self sustained at this point.

As a publisher I cant write to you and say well if I knew it would sell so well and I wouldn’t get any repeat business after 3 months I would of charged you 10 times the amount…

To me CPM with good creatives/original marketing is the best converting metric for both advertisers and publishers.

Advertisers have a budget and want to know how many potential eyeballs they can get, publishers want numbers they can go to their bank/accountants and say this is how much I take in per month. To plan the future growth of their business.

If its any other way Publishers wont have much of a reason to even display advertising (trust me running a site has become extremly cheap for most people) unless they are in full control of what money they are taking in.

[...] nota controvertida en TechCrunch: Let’s Kill The CPM está siendo retuiteada y comentada por media industria como si fuera una verdad sagrada, ahora, [...]

It’s still early to make a hard shift away from CPM because we still need to move many, many more traditional advertisers over to online – CPM is the most direct path since it’s what they know. It’s not as natural as shift to move to engagement, etc. as a pricing mechanism alone since it’s not as simple a transition away from the small banner as when we killed the small banner when Shelby was Chairman of the IAB–it was simply a matter of resizing banners. We need to have a transitional strategy where buys and post buys are valued both on CPM and engagement, etc. in order to evolve beyond CPM. At least we’re moving past click-through rates.

Shelby’s point that the fundamental problem with the current online advertising business is that there is too much supply of poor impressions relative to demand is right on the money.

But the market could move to value audience over context, especially with greater availability of targeting data, the ad exchanges and the trading/bid optimization platforms that are being built on top of exchanges. That will more than anything will solidify CPM as the dominant pricing mechanism.

The buyers want commoditization while the sellers want differentiation. It will be an interesting battle in the coming quarters.

As part of the small group of publishers who jumped together on ad stds, I agree that doing some kind of committee isn’t the way to go. I see two viable options to what Shelby points out (which I agree with btw).
1. A major publisher breaks through with some kind of CPM alternative and it will lead others to copy their approach. It wouldn’t hurt if some of the most innovative marketers/agencies worked with them.
2. Use the ChallengePost model (like a marketplace for X-Prize awards) to inspire and reward the innovators in the industry to come with some true breakthroughs. Perhaps some of the industry leaders with deep pockets can put up the money for the prize.

Hats off to you, Shelby, for bringing this up.

I think CPS is the way to go the whole idea of advertising being tied to one publication is the problem -

I recently was in the market for a netbook – I signed up for info on one of the netbook makers websites and lo and behold I have been followed by ads from the netbook maker everywhere I go on the web . Impressions are really irrelevant because the netbook maker is getting his name in front of me everywhere -across multiple websites.

Now the big problem for this netbook maker – I finally purchased a newbook a couple of weeks ago yet the ads are still following me – A waste of advertising for the netbook maker but I think what the netbook maker is attempting is definitely the future of advertising

[...] related tags: Internet & Web | Online Advertising | Former CNET CEO Shelby Bonnie authors a Let’s Kill the CPM post on Tech Crunch – incidentally, the blog that wants to kill [...]

Is it possible to have a marketing system that makes sense when the stuff you’re marketing doesn’t make sense? I mean.. come on… look at the stuff that gets marketed… penis enlargement? iphones with broken reception that can’t run google voice? cars that get 20 MPG and are constantly in the shop? I may not be a marketing guru but generally speaking, when the people who pay for the ads have their heads so far up their asses, it seems unlikely that you can selectively fix just the ad system without fixing all the other idiotic behavior of corporate America at the same time. Good luck with that…

Yeah – I’m quite surprised he went through the effort of such a well articulated position and then offered no solution other than “stop using it”

Shelby, your solution is exactly what I tried to do back in 1999 when I launched Telezoo.com. The problems with Telezoo were 1) I was way a head of myself 2) I focused only on Telecom market. Well, we all know what happened to that space back in 2001. They mostly died. The one survived, did not have any budget for their marketing department.

Shelby,

I’m sure your heart is in the right place, but your post doesn’t make much sense. It’s like saying that people shouldn’t buy apples by the pound because it encourages farmers to make worse apples.

At the end of the day, having a simple, basic currency useful for both producers and consumers despite the commodity pricing effect. It is the job of producers to sell value, which is why there is more than one CPM, CPP, etc.

Furthermore, one of you’re basic premises is absolutely false. All media have the exact same issue about impressions (whether you count impression or GRP’s, it’s still the same thing. GRP’s are merely impressions divided by the target group).

For instance, in TV clients pay CPP, but what they actually want is coverage. Nevertheless, GRP’s make an effective currency because they can be added from different sources, campaigns etc (just like impressions). It is the job of the buyer to optimize the campaign and the station to package effectively (Which, I believe,was the person from P&G’s point).

People still whine about “commodity GRP’s” and everybody tries to work the system to their advantage, but the system endures because it just works better than any alternative. There are some other options, such as performance based ads (called per inquiry in old media) and sponsorship, but CPP dominates.

So the real answer is to look to how the issue has been dealt with in other media. See: 5 things New Media can learn from Old Media: http://www.digitaltonto.com/archives/99

Regards,

Greg

Decades old axiom of advertising — acknowledged long before the internet was invented (thanks Al). Based on this famous quote, “Fifty percent of advertising dollars are wasted. The problem is which fifty percent.”

One other point to Techcrunch. Why don’t you run Flash in Debug mode like I have to (for Flex development) and visit your site. Every single page you deliver has a Flash error — I’m guessing somewhere in the ads. Bad enough that you run completely irrelevant ads (for me), areas of your page I never even glance at. Every time, though, I have to “Dismiss” some Flash coding error when your pages open. Maddening. Yikes.

As a user, I wish I could opt out of all advertising. I do not want to be targeted, and I am not alone. As it is, I have to resort to technology (AdBlock browser addon, Tivo, email spam filter) to remove this dreck from my life. Anything that makes it past these measures only infuriates me and generates massive ill will toward the represented brand.

Just stop.

[...] new advancements at Microsoft (which they get to eventually), but not before they take a swipe at a guest post at TechCrunch by Shelby Bonnie, which somehow involves discussing how much I blog and what an idiot I am for doing it. (I [...]

Great post and I fully agree with the rationale. Here’s my take in terms of the implications for smaller advertisers http://bit.ly/WX0MD.

I only wrote about this in 2008: http://www.thekmiecs.com/marketing-advertising/please-kill-the-cpm-impression-model/

Exactly right, Jordan.

Nobody should seriously be claiming that the CPM is a measure of effectiveness. It’s simply a rate card metric with which to price the delivery of ad impressions. And, after all, isn’t it kind of important to know, in assembling a media plan, how many people were reached with an ad message and how often?

When it comes to measuring advertising effectiveness, advertisers need to evaluate their campaigns by measuring the degree to which they achieved their financial objectives — which is to say, were enough incremental sales and profit generated by the advertising to more than cover the cost of the campaign?

There is no magical metric to use upfront to price advertising based on its expected effectiveness. You certainly can’t use the click — not with click rates at 0.1% and dropping. And it’s been shown beyond a shadow of doubt that non-clicked ads have value.

Lord knows what “engagement” means. That term keeps getting thrown around with no one able to either define it or relate it to advertising effectiveness.

No, it all comes back to using reach and frequency to price and plan, But then the hard work begins. Measuring the holistic impact of advertising — whether online or in traditional media — is mandatory but has never been, and never will be, easy.

Hogwash! CPM rates are highly negotiable thus provides a very affordable avenue for effective brand building through awareness (eyeballs) – and there is loads of research available that proves the positives of such campaigns. Agreed, as Jacob Nielsen often points out, banner blindness is a real problem but that problem often is down to terrible creatives which cannot be blamed on the publishers. It is the same in other media: bad ads don’t sell products.

Having too many ads sorts itself out very quickly. Again, enough research to show that a publication, electronic or other, loses readers/viewers when it contains too many ads. Experienced advertisers/agencies give those a miss anyway, as do experienced publishers. Too few ads and you also have a problem because advertising brings a degree of status to a publication… as research shows. [Find lots of ad research studies via the search engines.]

At the same time, experienced publishers create for more than the web. Their point of content entry might be the web but the aim usually is to have it transported to other media, including the user’s phone, TV, kindle, etc. and, ultimately, word-of-mouth. In affect, they try to do exactly the same as their advertisers – get eyeballs, get respect, get sales.

The best point about CPM-based advertising is that – providing you do your research well and have a good ad – you get what you pay for.

The CPC model is good… but it can end up costing more than the CPM model.

Nay, promoting the CPA model is the same as the bankers shouting for more free money.

BTW, Firebrand’s good some good points.

this seems more like a negotiating tactic your clients are pushing.

if site A provides better performance than site B, then you should be prepared to spend more on site A and look to develop a long-term partnership with that audience.

The problem you’re describing is not going to go away by killing the CPM rate type. The problem is one of advertiser behavior and idiosyncrasies within the market. Take “CPM” away and you still have all those idiosyncrasies/problems, yes?

I agree.
CPM is a land for greedy people.
In fact, I can get a million impressions a day for my website easily.

@Fred. cool. Then pay the site for the use you get out of it. Nothing’s free, even if the cost is shifted. It’s still not free.

I know a ton of sites that would rather just have their users pay them than to deal with all of the creepy ad networks that are out there. None of them provide any value other than to take money off of the top of the transaction.

So to those who don’t like ads, offer to pay your favorite sites to use them. I am sure they will turn ads off for you.

Wake up and Smell the Coffee…

I worked at the largest Radio company in world (enter guess here), as the interactive services director. This meant I was living in a CPM radio world, essentially, and selling a CPM internet world.
My experience was that large “traditional” agencies are comfortable when they can but this way. Sometimes this is an effective branding model,just like TV, print or radio.
CPM will not go away until clients demand more accountability. To do that the publisher will have to give up the revenue model they are so comfortable with. Tough road to hoe.
Nice, provocative post.
Will it change? Not soon.

if an advertiser backs everything out to an eCPA, wouldn’t CPA be the logical way to set up an economic relationship between publisher and advertiser?

If an advertiser is putting an ad on a publisher site – they’re looking for SOMETHING to happen – define that action and pay on performance…

I think this all should have ended as soon as the plugin called Ad Blocker Plus came on the scene.

I’m really surprised Ad’s are still a big deal after ABP.

How can anyone still make money with ads after ABP?

the fact that the ads are there doesn’t mean tc is sticking to CPI as opposed to CPC/CPA (are you?)

CPM is indeed a way to measure both cost and effectiveness of ad campaign, More impressions shows that adv is effective.
Shelby is right in what he demands from entrepreneurs.

This is brilliant. If you want to start a movement to kill off CPM, sign me up! I’m constantly amazed at all the “impressions” that advertisers have been charged for that never see the light of day — look at the display ads in local newspapers that are left in the kiosk because readers are smart enough to not want to carry them home and have to dispose of them.
P&G’s announcement that they will only pay for engagement will be a major step towards killing the CPM.
The reality is that the media and new marketing techniques are going to force change whether the agencies and media like it or not. Already we’re going beyond CPM and measuring response directly, and the merger of Adobe and Omniture will make that even more prevalent.

[...] swoim poście Let’s kill the CPM na łamach TechCrounch Shelby Bonnie sformułował tezę, iż branża powoli dochodzi do miejsca, w [...]

I also think this completely misses the mark and confuses issues.

There are major problems with online advertising, but CPM is not a broken model in all cases. In fact the counter argument can be made that the glut of metrics, obsession with engagement and conversion has killed branding. A major component of advertising has always been to build brand recognition.

The result of this type of thinking is ad production companies convincing clients to build brand specific content sites which are both a huge waste of resources (what would you rather read a toyota magazine or a car magazine or even a general lifestyle one?) and short changing publishers who are the ones that have a real audience.

CPA works on google because people are searching for products specific to the ads, that will not work for a lot of other types of sites (social media, content).

There is no one size fits all solution, CPA is great for google, doesn’t mean it’s great for everyone.

Ya I too wann to kill the cpms

How about branding?

“In fact the counter argument can be made that the glut of metrics, obsession with engagement and conversion has killed branding.”

-1

What is the end goal of building brand awareness? Sales. It’s the brand purists that sometimes forget that practically every brand out there is in the game to convert sales and generate revenues.

The issue here is that we don’t have a decent “value recovery mechanism” for content.

Advertising, no matter if it’s CPM,CPC, CPA, CPX… doesn’t work, at least not for online publishers, and not for many advertisers.

So how can publishers earn revenue to pay for more content and continue a virtuous cycle? That’s one of the most important and most interesting questions about the Internet right now.

CPM might be good for branding but it is not a good indicator of direct engagement.

But if there are several ads per page then even branding might not be achieved.. it just pollutes the complicates the reading experience.

But at the end CPM rules…

to be fair to the author, i think cpm is a well understood term.

“In 2002, my first full year as Chairman of the IAB, we made a decision as an industry to kill the original small banner (468×60).”

What a ridiculous and arbitrary goal! Didn’t work out that well, did it? You don’t get to make these decisions nor do the IAB. These decisions are made in the market. So why would you even care. As a publisher and advertiser, I’ll tell you that CPMs just work. Old media might have a problem with them because you actually get what you pay for.

[...] Let’s Kill The CPM Possibly related posts: (automatically generated)Twitter accounts of Obama, Britney Spears hackedConfirmed: CNN Acquires CNNBrk Twitter Account (Updated)Your Black Politics: Barack Obama’s Twitter Account HackedTwitter race between Ashton Kutcher and CNN narrows [...]

[...] Not Kill the CPM – Over on TechCrunch, Shelby Bonnie, former CEO of CNET, talks about wanting to kill the CPM.  His usage of CPM is [...]

My first take was Cost Per Seconds of Engagement WOULD make a lot more sense – until I consider how I and others like me open tab after tab to read sequentially. We often get busy and leave tabs open for a long time.

As far as I know there is no analytics solution that can determine WHICH tab I am reading for how long. Do some keep measuring indefinitely while others stop the clock after X time? I wonder how many have ever even thought to ask.

I admit I do not know what percentage of Internet users only have one page open at a time versus how many have many windows and tabs open at once; however, those buying by your model would definitely need to consider that factor.

If CPM model is killed, publishers will lose revenue and motivation for running their sites as it is another income line that provides lifeblood to keep sites running.

Have you explored social media? I realize there’s a time investment, so I wouldn’t call it free, but you can get a lot out of word of mouth and social media.

[...] Source:Let’s Kill The CPM [...]

Maybe CPM isn’t the problem.
Advertising itself has become a problem.

We all skip ads on the TV (zap): looking for better content even if it is only 65 seconds.
We ignore ads online (we tend not to see them): we need our attention to understand the content we are interested in.
We don’t open direct mails but file them vertically: why read the junk mail?.
We hardly look into or read emails from campaigns: not relevant to us.

We still might look at a great looking billboard while sitting in our car or when commuting as don’t have anything else to do.

[...] Cnet co-founder, Shelbie Bonnie also stated this issue on Techcrunch in one of his latest writing. [...]

[...] the weekend, Matt sent around a link to a great piece on Techcrunch called Let’s Kill the CPM written by Shelby Bonnie, CEO of Whiskey [...]

shelbie! we are not alone!

dan gillmore even stated it in one of his blog post.

http://mediactive.com/2009/09/12/eleven-things-id-do-if-i-ran-a-news-organization/

i even compile my insight view on this issue

http://www.vmalni.com/2009/09/the-false-blogging-practice-it-hurts-the-journalism-world/

Nice article, still CPC is used only when people know, can be a payment method for display advertising through contextual and placement on Google network for start and for this the user’s state of mind is not on “I know what I need”…

So, CPC can work for “I have no clue about what I want to buy” using display to persuade him in taking the purchase call.

[...] users. They get a lot of bad content and bad ads.  They are literally overrun by ads all day. via Let’s Kill The CPM . Share and [...]

Even if CPM is bad, we still do not have the solution.

[...] Let’s Kill The CPM I have been in the Internet media space for 16 years and will start by stating the obvious: The CPM has done more to stunt innovation and drag down quality products than any single thing on the Internet. (tags: advertising cpm marketing) [...]

[...] and some less–much less. Some authors have recognized the problem, as in the recent ”Let’s Kill the CPM” post on Tech Crunch, but few know how to solve it. Does Viewers TV Show Engagement Matter? [...]

Exactly right. And the answer is that in a world where everyone can be their own publisher, there simply aren’t enough advertising dollars to support everyone who wants to do this for a living. The question is what we’ll be left with when the inevitable shakeout occurs.

[...] Lets kill the CPM. [...]

[...] ¿Cómo se combate la incultura, con cultura?No, a la gente le duele ya la boca de decir que todo esto es una farsa gigantesca, y no cambia nada. La última perla, en TechCrunch. [...]

[...] un artículo publicado en techcrunch.com el CPM (coste por mil impresiones) es un modelo de negocio que aunque se lleva usando muchos años [...]

CPM for life! I love CPM. CPM allows me to get more clicks for the dollar. It just comes down to better targeting, better ads, more creativity, etc.

I have routinely paid a quarter or a fifth of the CPC price when running an effective CPM campaign. At worst, it comes to the same price.

First of all, Shelby, thanks for the great post. It got many people talking about this issue.

That said, I do not agree to your call for killing the CPM altogether.

CPM has been and always will be the most commonly used mechanism for advertisers to generate brand awareness. Those full-page ads in newspapers (funny how no one talks about newspaper ads these days, at all!), billboards on the freeways, banner ads on any portal, relate to something more fundamental as to how human beings think and make decisions – to buy or not to buy; if to buy, then when to buy and for how much.

But yes, the technology for delivering ads on a CPM basis will definitely change and make this an effective mechanism for advertisers.

To illustrate my point, consider this example: If you are on a page reading about Kanye West’s latest blockbuster release, you really do not care about (and thus your brain would automatically tune out) the ad for reducing your mortgage payments. On the other hand, if you see an ad for the latest lineup of shoes by him, you would look at it and if the message were sharp enough, you would probably click on it too! Agreed that clicking on an ad and landing on a page does not mean a sale, but atleast it served the purpose of generating awareness about that specific brand in your mind.

Thus, advertisers should set their expectations as to what they can possibly achieve from a CPM campaign – Generating brand awareness with a possibility of some sales.

Now, the main point that I am making in my example was that the CPM model worked – but only because of its contextual relevancy. Now, in addition to the page relevancy, add a topping of site visitor’s interest relevancy, so that in our example above, the ads were about the latest lineup of shoes only because the visitor at some point in the past on some other site, had indicated an interest in buying shoes – then we have a model that really works.

And in this digital world of the Internet, we can rely on technology to give us this mechanism of providing contextual relevancy – both for the page the visitor is currently reading (viewing) and the interests that the visitor had expressed in the past

While this is NOT a shameless act of promoting my own company, MyContextualAds.com, is exactly on this mission and so had to mention about it.

All in all, models that have worked in the past, super charged with sophisticated technologies will herald the new age of advertising models – whereby the ads generated will be relevant to YOU, the buyer – the center of the ad world!

[...] CPM – Does it makes any sense any more? I have been following some conversations on TechCrunch about the relevancy of the CPM model in today’s world. – Let’s Kill the CPM [...]

[...] September 28, 2009 · Leave a Comment I have been following some conversations on TechCrunch about the relevancy of the CPM model in today’s world. – Let’s Kill the CPM [...]

[...] I have been following some conversations on TechCrunch about the relevancy of the CPM model in today’s world. – Let’s Kill the CPM [...]

Sounds to me like the core of the issue are greedy publishers who use small ad sizes that allows them to slam 20 ads on the same page = very useless. Versus publishers who can identify their audience and present their inventory to advertisers who are interested in that demographic.
Maybe advertisers should be more careful whom they allow to plan their budgets, and how familiar those entrusted with the task are with their network and publishing inventory?
To me it is amazing how many people I meet in the industry who are only glorified sales people pitching the product and creating personable relationships with their to be clients, without knowing the ins and the outs of the product. In this case out product is intangible and can only be partially measured for success.
My point is that we are still pioneering a bigger field than we are capable of controlling at this time. The only thing we can do is to advance with care for our business relationships, clients, business partners, and share as much information as we can without bias for personal gain and grow as an industry. We are going to be the top advertising stream by 2013, instead of the #5 spot we hold today!

Sounds to me like the core of the issue are greedy publishers who use small ad sizes that allows them to slam 20 ads on the same page = very useless. Versus publishers who can identify their audience and present their inventory to advertisers who are interested in that demographic.
Maybe advertisers should be more careful whom they allow to plan their budgets, and how familiar those entrusted with the task are with their network and publishing inventory?
To me it is amazing how many people I meet in the industry who are only glorified sales people pitching the product and creating personable relationships with their to be clients, without knowing the ins and the outs of the product. In this case out product is intangible and can only be partially measured for success.
My point is that we are still pioneering a bigger field than we are capable of controlling at this time. The only thing we can do is to advance with care for our business relationships, clients, business partners, and share as much information as we can without bias for personal gain and grow as an industry. We are going to be the top advertising stream by 2013, instead of the #5 spot we hold today!

[...] Let’s Kill The CPM [...]

The future of advertising is grim I fear.

CPA and CPC don’t work either.

CPA is a nice concept for the advertiser but first off, you don’t get instant action on every ad. You may get activity a year or two later, the short term exposure is still worth something however.

At this point. publisher’s need CPM to stay in business. I agree with everyone that says its either CPM or pay to subscribe, essentially that’s what it is coming down to.

The online world has really woken everyone up to the metrics and it is not pretty for anyone. The publishers have a hard time justifying their rates that keep them in business and the advertisers see exactly what they are getting and expect more. I really don’t think they are getting any less than they have ever got, their eyes are just wide open to the reality now.

Reading through all these comments really makes me think anyone trying to make a living in advertising may want to rethink their careers.

Thanks for the photos…

Will,
Not meaning to be argumentative, but I agree with Francois. It’s not difficult to hyperlink an acronym to a definition like somewhere, and given the vast number of acronyms we are faced with everyday, it’s not so likely that everyone will be familiar acronyms used in a particular article. It would help the audience in general gain a better appreciation for the content of the article if they understand the terms in use.

I totally agree CPM is a dinosaur, but it is the only dinosaur we can use as a measuring stick. The Internet ‘click’ does not ask age, income or gender.
How else can we guage effectiveness?

I have two proposals.

One, change “impressions” of higher value than basic to “impacts” or “High-value impressions” (HVIs). This would require a new column added to spreadsheets, making comparison available at-a-glance.

Two, if there are Great Works by marketers that is little seen, create a forum in a web page AND print magazine (w/ DVD, don’t be cheap about this).

As for making use of Open Source, include the popular Internet real estate of YouTube, Facebook, Twitter, and other similar pages.

Feel free to use these proposals at will, they are now yours! I believe the “Great Works” exposition will transform online media on its own merits.

Sincerely,

Mike
mdcnet1@gmail.com
http://www.linkedin.com/in/mdcnet

@Portman, CPS already exists. Alenty measures how long ad-banners are seen (even with many tags, browsers, applications opened).
Some websites have already chosen to drop off CPM and start selling Guaranteed Exposure Duration.

I have helped launch about 400 community newspaper websites over the last 9 years. I help the paper with their software solution and follow-up with their “marketing” (selling the ad space.)
Here’s an important factoid: I have never seen an exception to the rule that the local newspaper is always the #1 visited site in the community that they serve.
Why? Because they deliver relevant local news content that people want. (“Girls go to state in basketball”) Consequently their ad space becomes valuable to advertisers because readers bookmark and come back frequently to get content they care about. (And spend about 6 minutes average.)
The biggest problem with many websites is that they can’t offer a reason to come back. In todays world the biggest competitor to all media’s is time – we all only have so much time to partition toward reading / internet / tv-radio. Because of this fragmentation people have gotten very selective about where they spend their time. Advertiser’s should view this metric “repeat, (local) visitors per month + time-on-site” as relevant.

Fascinating thoughts. Right on target, and long overdue…

[...] Dogster is no longer in the one million-unique category, it’s selling for six million uniques and until the CPM dies, this is still a volume industry. Neither company would comment much on the economics, but Dogster [...]

[...] Dogster is no longer in the one million-unique category, it’s selling for six million uniques and until the CPM dies, this is still a volume industry. Neither company would comment much on the economics, but Dogster [...]

Ha Ha Ha Ha…

What about machines that make ~better~ content than people.

If you’re a sheep, “we can build you” and replace you with an electric sheep.

[...] Dogster is no longer in the one million-unique category, it’s selling for six million uniques and until the CPM dies, this is still a volume industry. Neither company would comment much on the economics, but Dogster [...]

[...] un artículo publicado en el prestigioso blog TechCrunch está dando mucho que hablar en la Red acerca de la conveniencia de dejar estacionado este [...]

[...] Let’s Kill The CPM [...]

Fantastic post, Shelby.

I wholeheartedly agree with this statement:
“All impressions are not created equally.”

Not only can the ad placement be evaluated based on the content of the page and the number of ads, but also, it can be evaluated based on where the ad appears within the page. For me, personally, I do not place a high value on any ad below the “fold” of the page.

While the use of CPM is somewhat antiquated, the appropriate ad exchange will enable you to place a pixel on your action page. This will enable you to create to adjust your CPM bid “dynamically” based on a CPA target.

If this is the case. Then kill television, then kill radio. You have to remember all ads are not action. If that was the case you wouldn’t have ads on TV because how in the world can it be clicked, the same goes for radio. How about taking down the glorious Billboard then too that people just drive by everyday. You have to remember also that a lot of the publishers are not the blame, point your fingers at some of these agencies that let any and every site join their network which means that you get sites that have lack of original content and quality traffic. But at the same time, no matter the content no matter the site, some companies just want to brand to the world and though they could simply target their ideal audience, they still need to brand to the world outside of their target audience in hopes that when the time comes when that audience decides or rather needs that product or service they’ll turn to that brand that they’ve seen on CPM paid ads everyday via a social network or highly trafficked blog.

Here’s something you should think about:

Blue Cross Blue Shield could place their ads only on health sites and pay a large CPA and it would work. But does Blue Cross Blue Shield only want to reach that ideal audience or does Blue Cross Blue Shield want to be on the minds of the entire Internet audience? The answer would be that they want to brand to all, but would a large site or blog want to show millions of impressions before being paid on a CPA? NO! But Blue Cross Blue Shield doesn’t want to miss out on branding to the world in hopes that even that person on any large site would turn to their product when they do start thinking about health insurance. Let use Yahoo! for instance, sure BCBS could pay for CPA on Yahoo! search or on Yahoo! Health, but what will the majority of Yahoo’s other audience think about when they get ready for health insurance, will they likely visit Yahoo! Health or they’re likely to search Yahoo! for health insurance? Sure, they are, but there will surely be another large percentage of people who will not search health insurance or either visit Yahoo! Health, but would simply remember seeing the health insurance ad while checking email on Yahoo! or while playing Yahoo! games or while reading Yahoo! news on politics. Meaning, a brand is built in the subconscious when the more times the user sees the ad and when they do need the service they’ll look for the service that’s been branded in their mind, no matter whether they fit into a target audience or an absolutely untargeted audience. By the way, how many of us know the infamous words to the Allstate commercial or the infamous little Gecko? 75% of you who do remember the Allstate slogan or seeing the little Gecko on the Geico commercial where not watching an autoshow or reading an automotive magazine or on location at a car dealership. You simply saw that commercial while you where watching your favorite television show or any show because you where bored. It branded the product in the minds of others. Here’s another question for you and I won’t even give you the answer, when you think of a dating site, who do you think of?

That’s the value of CPM.

[...] http://www.techcrunch.com/2009/09/25/lets-kill-the-cpm/ [...]

[...] be measured by something other than click-through. Shelby Bonnie, former CEO of CNET, agrees and laid out a few ideas on [...]

[...] be measured by something other than click-through. Shelby Bonnie, former CEO of CNET, agrees and laid out a few ideas on [...]

From the point of view of the advertisers, CPM is a great way to get your product or brand out in front of a lot of eyes for a cheap price. For the site that publishes the ads, well, its a horrible way to make money because you have to drive a ridiculous amount of traffic by just to make a hundred bucks. Social media helps (helped maybe, before it was all so rigged) balance this out by delivering quick and cheap hits, but that kind of traffic has always been next to useless for making sales and conversions.

I think most sites will do best with CPC and CPA, but even that is limited these days as people put their credit cards away and start chopping at their budgets.

Well written and insightful; thanks for sharing your perspective. I agree with everything in your article except for your belief that the best solution is to kill off CPM prior to having a replacement pricing model.

Adify is discussing some alternative pricing models to avoid the pitfalls of our reliance on CPM pricing. We’re discussing the potential of Atlas Institute’s attribution model, as well as companies that offer interaction tracking or brand impact measurements. We’d love to hear your thoughts:

http://www.adify.com/kill-the-cpm-let-s-take-a-closer-look/

Jordan, I agree 100%. CPM is how the space is sold. Period. If the ads show in irrelevant spaces or if your website sucks, you probably won’t convert anyway. How does changing the pricing model change the imperative of having relevant traffic go to a high performing website?
So, let’s say your website does not suck and you have all the money in the world. Your goal is then to find relevant traffic, whether on Social Media sites, or with scheduling, BT/Demo-targeting, Smart Ads, etc. no matter how it is sold.

In short, it’s not how you BUY the impression, its how you expend the impression.

@Vlad, which ad serving technology is new and fresh, and why?

[...] However, that doesn’t mean that people aren’t thinking about this issue. In a recent TechCrunch post (which was arguing that CPM is a metric that needs to go away), Shelby Bonnie made the following [...]

[...] Całość znajdziesz na: http://www.techcrunch.com [...]

It looks like you may not be able to strike out the CPM model completely. Google has created a View through conversion. Which if an a definable action like visiting the website happens within 30 days, of seeing the impression. Which may show more value in the overall scheme.

http://adwords.blogspot.com/2009/09/announcing-view-through-conversion.html

[...] un artículo publicado en el prestigioso blog TechCrunch está dando mucho que hablar en la Red acerca de la conveniencia de dejar aparcado este indicador. [...]

[...] zur Webfinanzierung ist umstritten. Die Diskussion um das CPM-Modell wurde jetzt erneut angestossen von Shellby Bonnie. Nun wird weltweit engagiert diskutiert – hinsichtlich des Einflusses der Kreativität, [...]

[...] Bonnie (former IAB chairman) at Techcrunch First, just stop using the CPM. Yes, it will break every model and process that the industry holds [...]

Hallelujah!!

We’ve been saying this for years…..and at long last the momentum to change is making this a reality.

Both display formats and the pricing models need to change.

Display should be used as a vehicle to push content out – -a distribution mechanism is you like. The idea of driving to site completely misses the point in an era where users have multiple digital locations.

Pricing should be based on engagement. And it really doesn’t matter what an engagement is – so long as advertisers and publisher are in agreement. Time spent is a good place to start.

We have written a number of posts of the future of display advertising over at our blog.

http://bit.ly/17SHtK

See my presentation to Ad Tech London “Grown Up Online Advertising”

http://bit.ly/PSiWi

[...] Another nail in the coffin of CPM – good! [...]

[...] un artículo publicado en el prestigioso blog TechCrunch está dando mucho que hablar en la Red acerca de la conveniencia de dejar aparcado este indicador. [...]

[...] À LIRE In Media, Media Kartell, www on 5 octobre 2009 at 23 11 23 1023 _ Let’s kill the cpm [...]

[...] eCPA, and every intelligent publisher their eCPM. This is why when I see ludicrous articles like this one about how we should stop using the CPM method (oddly by someone who formerly ran the Interactive [...]

[...] There may be some hope of changing the pageviews model. Check out this recent call by former CNET co-founder Shelby Bonnie to kill the CPM. [...]

[...] Let’s Kill The CPM: (reklame ) [...]

[...] http://www.techcrunch.com/2009/09/25/lets-kill-the-cpm/ [...]

[...] lisant l’article LET’S KILL THE CPM j’ai eu une idée, baser le coût des publicités sur Internet en fonction du temps [...]

[...] Bonnie’s recent post on Techcrunch, Let’s Kill The CPM, and Jitka Petrickova’s (Three Minds) Should We Kill The Ads Or The Metrics? probably goes [...]

[...] pokazał bardzo smakowite case’y związane z reklamą ale chyba jako pierwszy zabrał głos w sprawie problemów z wyceną i wartością dla klientów reklam display (tudzież “wizerunkowych” jak elegancko można je [...]

[...] Shelby Bonnie, former Chairman of the IAB, recently very famously exclaimed on Techcrunch that the CPM model needs to die on the web, and to properly value content on the web, we should move beyond [...]

[...] a 10:26 · Archivado en Uncategorized Una nota controvertida en TechCrunch: Let’s Kill The CPM está siendo muy comentada por media industria durante las últimas [...]

[...] al CPM total nadie sabe con que reemplazarlo. 11 Nov 2009 Una nota controvertida en TechCrunch: Let’s Kill The CPM está siendo muy comentada por media industria durante las últimas [...]

[...] The metric that’s killing web innovation (Techcrunch) SHARETHIS.addEntry({ title: "Must read innovation stories of the week: The innovators Code", url: "http://game-changer.net/2009/10/03/must-read-innovation-stories-of-the-week-the-innovators-code/" }); Must reads of the week [...]

[...] interesting post today on Techcrunch suggests that we should kill the CPM to save the online advertising industry.  As the argument goes, by using CPM as a prime [...]

[...] days. Bonnie, for his part, is always thinking of new media models and thinks it’s time to kill the CPM. CrunchBase Information Whiskey Media Information provided by CrunchBase [...]

[...] The company will use the money to launch more structured content sites on the same technology platform across different niche media, which is a popular strategy these days. Bonnie, for his part, is always thinking of new media models and thinks it’s time to kill the CPM. [...]

[...] the industry moves away from plain-vanilla CPM ads—which lead to banner blindness—and towards a variety of better-performing ad formats (including [...]

[...] the industry moves away from plain-vanilla CPM ads—which lead to banner blindness—and towards a variety of better-performing ad formats (including [...]

[...] [...]

[...] artículo en TechCrunch de Shelby Bonnie, CEO de Whiskey Media, que nos expone las “maldades” del CPM como el elemento sobre el que pivota gran parte de la publicidad en [...]

Thank you for this article. I think you are right, but that it is important to focus more on solutions and alternatives to the problem – more dynamic and interactive advertising solutions for clients. The problem is that most clients, at least in my experience, don’t understand these alternative solutions.

[...] Anyone can get access” to eyeballs. If this is the year the online ad industry begins to kill the CPM (cost-per-impression) model, VideoEgg is already on the right track. CrunchBase Information [...]

[...] via http://www.techcrunch.com [...]

[...] Anyone can get access” to eyeballs. If this is the year the online ad industry begins to kill the CPM (cost-per-impression) model, VideoEgg is already on the right [...]

[...] Stampa A morte il CPM! Scritto da Luca Lani il 1 marzo 2010AdvertisingPrendo spunto da un  intervento su TC di Shelby Bonnie (Fondatore di CNET) nel quale si lancia la provocazione “Uccidiamo il [...]

[...] Let's Kill The CPM [...]

Can you really kill the CPM without something to replace it with first?

You should link directly to Cost Per Impression. I for one didn’t know which CPM this article was referring to at first.