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why the variance in banner $$$ payouts for different sites

...the RON vs CAT theory

10:54 pm on Jul 1, 2000 (gmt 0)

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WebmasterWorld Senior Member rcjordan is a WebmasterWorld Top Contributor of All Time 10+ Year Member

joined:Apr 22, 2000
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Excuse me while I pull together various posts about "whining about banner brokers" here. Sorry if it rambles a bit, I'll try to edit it for some sort of continuity.

Some say they're doing OK, some say they are having dismal results.... yet we're all talking about the very same ad brokers (Flycast in my case), something's screwy here. We mention that XYZ ad broker is not "selling" the inventory; I've looked at how a media buyer might use Flycast and I don't see much of an opportunity for the FC rep to be interacting with the average buyer (I'm sure they do for the industry big dogs). Is it possible that the buyers are becoming more selective, moving away from "Run of Network" and are doing "Category" buys? If so, this might explain why some sites are left with huge default percentages.

When I first went with FC (Oct 99), I excluded many, many types of banners. And, though it was performing extremely well, I ditched "The Monkey" too --that was because he started hogging a huge percentage of my impressions. I was trying to keep the banners at least somewhat in context, and hoping for a broader mix, too. Overall, this seems to have worked moderately well, but nothing to really brag about. I have noticed that a certain set of banners seems to have gravitated to my site as "regulars." However, CPA is showing up more often, too.

As for the recent increase in default rates, I'm pretty sure the NASDAQ fall did have some effect, that's been verified in the financial press without making any references to specific ad brokers. But, it's also possible that the ad brokers are over-stating that impact because it's a convenient excuse to cover some fundamental problems and flaws in the industry. I think "dilution" --too many suppliers for the same number, or even fewer ads-- is really the culprit. RON suffers most, those sites that have enough of a niche to attract CAT buys may be buffered somewhat. That might explain why we're seeing both positive (OK, well, not-so-negative) and negative comments.

According to my 'theory' on how the ads are being purchased, if there is a surplus of ad 'slots' available from websites, and not enough buyers to fill them, then websites that have primarily RON buyers will see their default percentage increase substantially. If a site has a lot of Category buys, then they might see large increases in the defaults if the site doubled its amount of available inventory and those that were buying in that category didn't decide to pick up the extra impressions due to budget, etc.

The savvy buyers watch the CTR and gravitate to those sites that perform better than average for them. For the period 05/01 - 05/15, including defaults, I'm averaging .56 CTR. My 'regulars' range from 4.82 to 1.5. Since this is above the average CTR, I assume that this accounts for why they have become my regulars.

How to encourage CAT buys: The best money is made if some sites prove to be worthy enough for media buyers to be willing to bid up the CPM or by targeting them in CAT buys. Take a look at your media kit on you ad broker's site (it should point to a better, more in-depth one on your site), it's your calling card. Realistically, does it tell a buyer anything that might distinguish your site?

How to keep CAT buys: I contend that CPM is actually secondary to the buyer... it's the net cost per visitor (whether it is driven by CPC or CPM) that determines whether you are a good buy. When I look at the stats, I figure that anyone not coming in below $1.50 is likely to bail in the long run. Why that amount? It's roughly the cost of a junk snail-mail campaign per name in the mailing list. We're not operating in a vacuum, we're competing against other methods of getting eyeballs, too.

Trends: I believe that a space available shake-out is inevitable and is actually already underway, that we're trending down on RON CPM rate, and that those with the lowest costs related to making inventory available will end up with this business. I think that only a few web ventures will be able to survive on banner sales alone. On the other hand. the affiliate networks are proving daily that there is a seemingly endless supply of webmasters out there that are willing to sign up for 3cents per click. I guess the message is that we're going to be forced to find other revenue streams.