Let's Kill The CPM
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Editor’s note: This guest post is written by Shelby Bonnie, the CEO of Whiskey Media. He co-founded CNET in 1993 and was the Chairman and CEO from 2000 to 2006. He served as Chairman of the IAB from 2001 to 2003. Whiskey Media is a content platform with three sites, giantbomb.com, comicvine.com, and animevice.com lots more to come.
OK, Advertising Week just ended… does anyone else feel like the online advertising industry is the orchestra, playing on while the Titanic is sinking?
We have a problem, folks. And I, for one, think we should start to fix it by killing off the CPM, once and for all.
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. Maybe it works in other mediums, but it sure as hell doesn’t work on the Internet. Having been both a small and big publisher (now small again), it’s been my experience that the collective focus on CPMs and counting eyeballs by marketers, agencies, and publishers has led to a whole mess of unintended consequences that have produced a series of “solutions” that work for none of those parties. And perhaps more importantly, it’s been terrible for users.
All campaigns start with the best of intentions: “let’s do something creative, engaging, and unique!” But unless someone really senior from the agency or client side intervenes, the road for a campaign always leads to the media buyer and the dreaded spreadsheet, where the two most important columns are impressions and cost. Ironically, there’s usually some good stuff in campaigns, but they are thrown in for free as “value adds.” At some point, publishers decide that if all clients care about is impressions, then OK, we’ll give them impressions. The output is an industry that overproduces shallow, superficial, commoditized impressions. 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? Why do sites intentionally try to get us to turn lots of pages with tons of top 10 lists, photo galleries, or single-paragraph summaries of someone else’s story?
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). Though it was the only unit that many of our partners accepted, if we didn’t kill it, the industry would have had a very difficult time moving past it. We had to be bold and take some risk, but at that time we ushered in the move towards larger ad units, a move that all agree was a big improvement. We are at a similar point today. The focus on CPM is causing a bunch of behavior that is bad for publishers, marketers, and users. Only by killing it do we have the opportunity to invent our new future.
Why is the CPM such a problem?
- You always get what you pay for. I believe in basic economics. If you pay for impressions, you get impressions. Is that, in the end, what marketers really want? How about engagement? How about impact? How about actually selling product? A glut of impressions has helped no one.
- All impressions are not created equally. There’s a big difference between seeing an ad on a page of content that contains one uninteresting paragraph and twelve ads, and seeing a single ad on a page that is relevant to the ad and covers a topic for which the user is highly passionate and engaged. The differences between social network and content inventory is another example–how do you put those items on the same spreadsheet?
- There is no natural constraint . TV, print, and radio can only put so many ads within their product. But on the Internet, that is not the case. We can continually increase the number of ads per page or manipulate users’ behavior to goose our impression numbers. Can’t you see some publisher saying “if they just want impressions, why don’t we go from four ads on a page to eight” or “couldn’t we turn a new ad every time someone loaded up a new e-mail?”
- It doesn’t mean anything anymore. With such a glut of impressions from all media and the number of impressions with which people are bombarded with every day, it just doesn’t matter anymore. It’s an arcane notion that’s a holdover from a time when there wasn’t as much media. As I said, TV, radio, and print had natural constraints and there was a lot less of it. So just seeing an ad was, by definition, unique and impactful. Those days are no longer.
- Senior marketers get it, but there is a whole infrastructure built around the CPM. The process is built up around how ads are bought and sold, based around a media plan, and asked for in RFPs. All the good, creative thoughts get boiled down into spreadsheets, that are for the most part owned by folks that are not that far removed from their last college class. Even senior folks have to try to fight their own system to keep the ideas that they like.
- This is not a win for marketers. In a world of over-produced impressions, even great work by marketers is ignored at best and more commonly not even seen.
- The ultimate losers are the users. They get a lot of bad content and bad ads. They are literally overrun by ads all day.
What will a new solution need?
- Simple. In the end, I realize that to make the business of marketing work it can’t all be art. You have to have a way to create a streamlined process. Everyone wants and needs a way to compare campaigns and metrics to determine success. Simplicity can lead to scalability, which allows for more efficiency for publishers, agencies, and marketers. Having said that, the simplicity we now have has led to a model that doesn’t work.
- The metrics should be more closely aligned with what you want. Whatever you pay for is what publishers will start mass producing. If you want engagement, pay for engagement. It is unclear whether there is one metric or many. A starting point might be to start with uniques, actions (like sharing, contributing, and engaging), and time.
What about the CPA or CPC?
- CPA and CPC have their appropriate time and place, but let’s recognize that those situations are limited. Yes, they work great when people know exactly what they are looking for, but how do you convince them to buy something they don’t know they need? Pure click performance just emphasizes the status quo of what I already know and already buy. Yes, it’s an action… but so is a video view, a wiki contribution, a contest sign up, a tweet about a product, and so on. We also know that a singular focus on these items would create as crazy a set of unintended consequences as we’re currently dealing with today.
Where do we start?
- First, just stop using the CPM. Yes, it will break every model and process that the industry holds dear, but we need to get rid of the crutch. The ensuing turmoil will bring creative thinking, new ideas, and entrepreneurial passion.
- Let it be a movement, not a task force or sub-committee. Create room and dollars for entrepreneurs to experiment and try new things. They all might not work, but we will collectively learn. A bunch of task forces by industry associations will only make it worse.
- Think open source. This should not be proprietary or an individual company’s technology, it needs to be an effort on everyone’s part to do this together with the benefit accruing to us all.
- Realize that we all share a common need to fix this. The fight is with the system, not each other.
I certainly don’t have all the answers myself, but as a veteran of this space and someone who deeply cares about the medium, it is about time we all make a concerted effort to change our direction. I would love to hear your thoughts (shelbyb [at] whiskeymedia [dot] com).
Photo credit: Flickr/SuperFantastic
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