The Future Of Premium CPMs

Ben Kunz wrote an interesting article for Business Week that was published online today. The main point of the article (in my view) is that publishers accustomed to charging high CPMs on ads (sometimes over $60), are in for a rude awakening, because advertisers and ad networks can use retargeting to find the same users for a tiny fraction of the price. I disagree with Ben, but I don’t want to speak for him, so if you’re going to read this post, please read his article first.

My own experience as a media buyer and a former employee of the mother of all premium online publishing companies, CondeNet, leads me to see things a lot differently.

To be sure, there is a massive disparity between the cost of buying an ad on a site like, say, The New York Times, and buying an ad on a large network. And yes, you may hit the same users… in fact, through the magic of retargeting technology, you can sometimes be *sure* of hitting the same users (or at least, users surfing the web with the same computer and browser).

However, that’s not the whole story. It’s important to consider the following:

Branding. It’s not all about getting as many clicks as possible, at least not for all advertisers. When the publisher has credibility with the targeted demographic, then the advertiser sometimes buys media just to get across to the demographic the idea that there is a connection between the two. For example, a new stylish and expensive brand of designer women’s clothing, at the level to rival Bergdorf Goodman and Yves St. Laurent, is going to run ads on Style.com as part of their launch strategy. They’d be crazy not to, even if they already know that they can reach most of the same users on Page Six for less money. The goal isn’t always economy of scale; sometimes it’s simply brand positioning.

Placement. Not all sites are created equal. In fact, most of them are created rather poorly, especially insofar as Read the rest of this entry »

The Long Tail Of Remnant Ad Inventory

I’m disappointed to see that Chris Anderson, author of The Long Tail, has made another post in which he completely misinterprets industry data to justify his ideas about the way online CPMs work. (See also Chris’ last post on this subject, and here’s my comment on it.)

Chris references some PubMatic survey results indicating that large websites are getting lower CPMs these days than smaller websites.

Unfortunately, he chose not to address a note from the PubMatic page: “The pricing data reflects net publisher monetization via ad networks and excludes ad networks’ share of ad spends as well as inventory sold directly by publishers to ad agencies or advertisers.”

Here’s what that means: Read the rest of this entry »