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Study: CPM Rates Do Not Equal Value

Interesting news out of the fine folks at Comscore today, where they kindly point out that the price you pay CPM has nothing whatsoever to do with the value of the advertisement.  What’s new, I’ve been saying this for years, pointing out that with the industry rife with fraud, people not seeing advertisements and brand media buyers just lazy, you never get what you pay for. According to the study, which used 1.8 Billion impressions from advertisers like Allstate, Ford and General Mills,  there is absolutely no correlation to a price you pay, and the value of those ads.

These handy charts that they provide shows that unfortunately, just because an advertisement is not seen, doesn’t mean that you actually pay a lower price. Meaning that people sometimes are charges just as much for ads that aren’t seen as the ads that are seen. Remember, approximately 30% of all ads are complete crap.

What does this show you? That the CPM marketplace that is full of exchanges, re-sold inventory and completely junk exists to make lazy media buyers happy.  Again, this goes back to what the Performance Marketing industry has said over and over again: that these exchanges need to be focused on ROI and perhaps CPA advertisements. Most inventory is junk and needs to be sold on a performance-only basis.

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Pace Lattin

Pace Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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  1. I agree but the question is: how do we drive this change? Seems like brand advertisers just keep paying so the real value of the ads will never be seen

  2. This is hard to solve, but I guess almost everyone in this industry are using some kind’s of tricks… It’s kind of let’s say “not surprising” :D. I don’t get excited anymore about CTR’s, open rates, number of impressions and so on. Only thing that matters at the end of the day is ROI. Other stuff can only help you to optimize campaign. If you are not getting good ROI but your CTR is high and you are getting lots of impressions, I dont see anything good in it :). Three words: ROI ROI ROI

  3. I will not defend the value below the fold ads, but ads that are actually seen, have value beyond the directly attributable ROI numbers. Building brand and product awareness has been proven since before the internet existed to be an important part of a comprehensive marketing plan. Last touch attribution fails to address the full impact of branding and awareness channels. Conversions are easier to come by and ultimately less expensive for companies who have established brand awareness and affinity before a consumer is presented with a direct response offer/incentive.

    Next time you look at your conversions, notice that searches for your brand or product name are not only the cheapest but also the best converting traffic available.

    1. Jeff, I think branding needs only to exist in a very small niche based marketing online. The rest of advertisements can have actual measurable ways to prove branding, from signup forms, request for more information forms, surveys, etc..etc.. “branding” online is used by the very lazy when it comes to consumer based products.

      1. Pace- I disagree with your comment on branding only needing to be a small component of online marketing programs and is “used by the very lazy.” From my perspective, direct response is actually much easier to quantify- leads, clicks, RFI’s. Try running pre vs post-campaign analyses to measure brand marketing metrics such as recall, uplift, etc. I would expect more from a self proclaimed digital guru.

        Also, viewability of ads is a major component of the iab’s 3MS initiative…will likely have the industry redefine what constitutes an impression (i.e. actually viewed, not just delivered). The viewable impression will have a huge positive impact on both DR and brand programs.

        1. “Tigress” here’s the issue: over and over again, it’s been proven that 90% of the inventory is borderline crap. Study after study shows that exchange, networks, RTBs are selling crap to agencies.

          Are we talking about the 10% that isn’t crap, site wide buying, video branding that can be proven.. obviously not. I was the co-owner of the first digital rep firm, cybereps in 1998. I obviously believe in the idea of branding, and value. I’ve also build ad networks, exchanges, a product bought by google for $300M and so on. Branding can work…

  4. Does this affect us at all if we own websites on which the ads appear? Does this mean we don’t get credit for some of the views our sites provide?

  5. Inventory will never be sold on a CPA basis. It’s not as profitable as CPM long term. What traffic networks want is a flat CPM regardless of what you make, a place where the richest guys thrive.

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