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CPM vs CTR - How to play an honest game
Negotiating with website professionals
okgirl




msg:3476381
 12:25 am on Oct 13, 2007 (gmt 0)
Hi, Iím new to the forum. I have a question, we have been contacted by a chief competitor with a request to run an ad on our site. We sent him a rate card and quote of $2 CPM. Their website is owned and operated by a web design/seo company.

Our traffic is about 240,000 uniques with 2.6 million page views a month. Their traffic is a little greater, but their pages views are considerably less. They are the #1 site for our general category.

They offered a flat rate of $2400.00 per month to buy out our entire ad inventory over a two or three month span. When we agreed, they requested that we run their ad on our 136 page site for two days and then negotiate a price based on CTR instead of CPM.

Any advice on the topic would be deeply appreciated.

 

SeanW




msg:3477387
 10:43 pm on Oct 14, 2007 (gmt 0)

Is $2400 a good price for all your ad inventory? At the $1.08 CPM they're offering you, you're losing money on the deal if you're more than half sold already.

Assume a 1% CTR that's 10 clicks/1000, or about 11 cents a click at their current rate. Do you think that's a reasonable price for them?

When you have the stats back you'll know what your CPC will have to be to make this worthwhile. Build a spreadsheet to figure out at what CPC you're better off telling them to get lost.

Another couple of things to think about:

Are they designing the creative? If they're looking for branding you might see dismal CTRs and you're giving away a lot of impressions you could be otherwise selling on a CPM basis. You may want to negotiate in a minimum charge, or at least an out clause if this isn't working out.

The clicks you're sending are to your competitor. You help build them up, your other advertisers might follow your readers.

Sean

sastro




msg:3477894
 3:33 pm on Oct 15, 2007 (gmt 0)

I suggest that you choose CTR for 2 or three mont and then CPM for the next month.
After 2 or 3 months your visitor will know the ads and will not be clicked.

jimbeetle




msg:3477919
 3:53 pm on Oct 15, 2007 (gmt 0)

Hmmm. They made you an offer. You agreed. They changed the terms. That wouldn't set well with me; I'd be very leery doing business with these folks and probably just walk away.

By the way, welcome to WebmasterWorld, okgirl.

okgirl




msg:3478005
 5:10 pm on Oct 15, 2007 (gmt 0)

Sean, Sastro, and JimBeetle - thanks, excellent food for thought! One thing that irritated me about the whole deal is that we did cut him a deal. Once he made the offer, I told him that I would consult with my partners and get back with him. He couldn't even wait 36 hours for a decision. He emailed three times and seemed to be very impatient. Also, in the beginning it seemed very important to him that we be able provide him with web anylitics until we told him that we could, then suddenly he wasn't interested in ad tracking anymore. And finally, This isn't our first strange experience with him.

Every 4 or 5 months he emails us and goes on about how we should work on a project together that will benefit both of us. If we say okay, that sounds good let us know what you have in mind... then we don't hear from him for months. If we ignore him, he throws another half-baked idea at us. Either there is something deceptive going on here, or I'm just paranoid.

You have helped me make up my mind. I think getting involved with him financially would be a mistake. At a gut level, I feel like I'm being stalked and played with by a hungry lion. It just bugs me that I can't figure out what his true motives are. Thanks again, I feel better now about walking away. The money just ain't worth getting eaten! I'm curious about your take on him...

dibbern2




msg:3478377
 1:20 am on Oct 16, 2007 (gmt 0)

From what you've said, I'd be very careful...

skibum




msg:3478549
 6:30 am on Oct 16, 2007 (gmt 0)

$2.00 CPM seems pretty inexpensive. If you have doubts, I'd just ask for cash/guarenteed funds up front at the beginning of each month/quarter/etc...

markwelch




msg:3479035
 5:40 pm on Oct 16, 2007 (gmt 0)

> Hmmm. They made you an offer. You agreed. They changed the terms. That wouldn't set well with me; I'd be very leery doing business with these folks and probably just walk away. <

And you also say that this isn't the first time you've had strange dealings with these folks.

My advice:

(1) Cash up front. They WILL default on payment promises if you deliver first. If they pay half up front, they won't pay the other half.

(2) Do NOT sell them "all" of your available ad inventory; no matter what happens, include some other advertising in the "mix" on your site.

(3) Why not put Google AdSense ads on your site and tell them that if they want to buy inventory, they can do it through Google AdWords, unless they're willing to pay you $XX CPM.

jomaxx




msg:3480276
 10:18 pm on Oct 17, 2007 (gmt 0)

I agree with the previous responses. $1 CPM is already very low; it's up to you to determine if this is a good deal for you, but it's a bad sign that they are already trying to negotiate you down from an agreed price.

I don't agree with basing the deal on CTR if you don't have creative control over the ads. But maybe it would build trust if you would guarantee delivery of the quoted number of impressions.

webwannabee




msg:3485762
 5:37 am on Oct 24, 2007 (gmt 0)

dont worry about CPM -- look at the bottom line; when I was new and hard up for ad revenue I often heavily discounted the rate card.

Just make sure he knows it is on a month to month basis and that you have the right to cancel him or raise rates as you see fit.

$80/day is better than zero.

CTR - that's his problem - you give him the real estate; it's his job to convert; if he is nice and you see long term potential and you dont want to lose him,, add a text box beneath the banners to enhance click through or you can spam your own site to boost clicks.

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