CPM – Impressions will make a comeback

The whole online advertising industry has been changing quickly. It was based on Cost Per (M)Thousand Impressions (CPM). Then it was based on Cost Per Clicks (CPC). Now it seems that everything is moving toward (if not already) Cost Per Aquisition (CPA).

Paying publishers based on CPM as a metric was flawed. Flawed for the ultimate task at hand… To get an online aquisition. Conversion rates were all over the place, barely any targeted placement was being done. Relevant data, what is that? We didn’t even know how many people were actually following the ads.

Along comes CPC. We start paying out by the actual clicks, it’s a little easier to track the conversions than CPM. Of course this was not perfect and seems to be on it’s way out as of this writing.

So where are we at right now? Well, everyone is sporting CPA as if it’s the greatest thing since sliced bread (why is this so great anyways?). Pretty easy equation to figure out. If the goal is to sell something directly through an online ad, then measuring the success directly through the sale seems the only way to go. Why in the world would we have done it any other way? Seems simple, right? The advertiser needs to acquire something in order to be successful, be it payment or an email address, or an opinion (survey). If this is the final goal, why would we measure it any other way?

I’ll tell you why, it’s not the way or manner in which the product is marketed that brings it a sale. A bad product will have a bad conversion rate. On the other hand, a good product will have a bad conversion rate if marketed in a poor manner. The current state of industry is this, we must rely on hard acquisition numbers for our payouts because no one knows how to value an certain spot at any certain time on any certain website with any certain product… yet!

I believe this metric can be found, and it’s worth being proven. We do this for television commercials already. Prime time commercials are worth more. Women’s products are worth even more to the hypnotized Oprah crowd. Men’s products are not advertised during Oprah. We seemed to have cracked the code for television. Television, like the web is always changing and so are the advertisements.

Granted, the web is more complicated, more fickle. The users are starting to expect more, but we have the ability to change the ads per user, and on the fly at the last minute. We have oodles of practically free computing power to inference products, services, or whatever to target the end user at that time. We have instant access to his web browsing history, or past purchases, we even have access to the services and content of the email at times. Think gmail is completely free? Those targeted ads don’t come from nowhere.

So why should we sit back and let someone else’s product tell us how much we should make for something that has an unknown conversion? We should know how much our advertising spots are worth. At that time, for that user’s demographic, based on past purchases and inquiries. We should be able to calculate the optimum product for purchase at that time and deliver a much higher conversion percentage. If you give us a crap product, guess what, you’ll get a crap conversion.

The other side of CPM. Why does an acquisition need to be made for the Ad to be successful? I’ve never once tried to click on the commercial in the TV to buy any product. Is branding completely dead? We need to offer to build ads just for branding purposes. Stop charging for the ad, start charging for the space. Radio stations do this already. Let’s catch up to radio for God’s sake!!!

The real problem here is that no one has come up with the formula for how much an ad should be. You can bet Google is throwing a shit ton of money at finding this solution. I will be right there trying to find out how to cash in on the CPM train.