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 »