CPM method of advertising could have some gas left.

There is gotta be a way out for publishers...

[Artashes]

I've looked around and I found this forum to be one of the best around in terms of the number of interesting people involved, smart posts and ideas being discussed! I myself very interesting in e-advertising, thus I could not believe I was missing all this fun!

Anyways, just wanted to say HI to all of you. I hope to stay here for a while and share ideas/knowledge, whatever intelligent comes on my mind. :)

HERE IS MY QUESTION(S)

Let's talk CPM method of advertising. I personally think that web site owners could still make profits selling banner impressions (not click-throughs). For that, which is very risky, they simply have to lower the rate so that it comes into direct competition with click results.

In my case, I have over 100,000 unique visitors and about 350,000 page views per month. I have lowered the CPM rate to almost $1 CPM in hopes that advertisers would find it "interesting" to try because the number of clicks is unpredictable and even 3-5 clicks per CPM would cover the cost of what they would have spent on pay-per-click search engine (same 1 dollar or more).

And if you look at the results - you'll still make more money than what Advertising Networks would have paid you (I quit three large Networks because I suspect they cheat - well, that's another topic).

However, no contracts have been made so far... and I don't know whether its good or really really bad... I personally sense the idea is still good, but would like to hear your opinion. Whether publishers like ourselves could break that iced period of no banner impressions selling.

Best.

[RoadRash]

I guess it all depends on your market, your visitors, and how you personaly can sell your site to advertisers. I have had good luck trading advertising for goods / services. The value to me was always over $5CPM, however the value of the goods in the advertisers eye, was a fraction of that.

[Artashes]

RR, I have actually had good experience with trading advertising for services myself. I got a couple of excellent site partners that way.

Its a good practice I find as its cheap for you, its cheap for them, but the value of services provided to each is high.

[NeedScripts]

Artashes

I don't think as a web site owner there is any need for you to sell the banner ads as low as US$ 1.00/CPM. Remember, there are lots of factors that can effect the cost

1) Site Audience
2) Site Stickyness
3) Visitors Loyalty
4) Site Content (unique or duplicate)
5) Site Theme
6) User Interface (load time, navigation, looks on all browsers, color combination, how does the site looks)
7) Amount of Competition
8) Amount of Competition among advertisers. (the more the marrier ;) )
9) Your Ability to provide customer support to visitors
10) Your Ability to provide support to advertisers.

I guess the list can just keep on growing but the main thing is HOW GOOD THE SITE IS. Cuz, if I am not wrong, there are still tons of sites that charges more then US$ 50.00/CPM for ROS and as much as US$ 120.00/CPM for target Categories.

I guess, it all boils out to your site content and audience. Convience a company that putting a banner ad on your web site is the profitable thing for them, then I can assure you that you *will not* have to worry about selling another banner ad.

Hope this helps.

P.S.. 100,000 unique/month is good, can you sticky mail me the url.

[Artashes]

NEED SCRIPTS, in reply to your message, I have a very clear target market and it does look pretty in that regard.

Also, the project is more a portal-type - it has variety of specialized projects that make up this Network.

I will try to go after a couple of advertisers personally by sending them letters introducing the offer by post mail, but 1) i don't know if that is at all effective, so 2) if any of you have tried any methods to attract potential clients, I'd appreciate if you could share them with us.

Best.

[chiyo]

Happy to share our experiences. We have very low weight sites that are informational in nature targeted to a very specific btob and professional global market.

We investgated click through ad and repeorting systems for advertisers, but in all cases found the extra codes and weight required for tracking was unaceptable.

We simply provide a quote to prospective advertisers based on our logs of ad impressions for the month before, and write a monthly to 6 monthly contract for (mainly text or very small graphic) ads on certain pages. We talk in CPM terms but basically its a negotiated price based roughly on this. Our sites are best used for fairly high cost items in the services area such as management consulting, market reports, and business travel.

OK, the client has no way of tracking hits and no client interface, but we provide them with a monthly report on the pages and number of times their ad appeared (all ads are rotating javascript)

We have been successful in signing up a few already using this method, and its up to them to track their own ROI and estimate it using their own methods, (usually logs). Already one has renewed since the new program started in September (the only contract so far to expire). Please note we are not talking major revenue here.. say around $3-500 USD per month at present for sites with a combined incoming uniqiue IP count of around 100,000 (excluding robots etc) and page views around 350,000 pm. We expect this to increase.

But it does work for us.

[Robster]

I had to look up and check the date on this post:

"there are still tons of sites that charges more then US$ 50.00/CPM for ROS and as much as US$ 120.00/CPM for target Categories."

I thought I was back in 1998 for a second.

I can't even comprehend how someone could justify 50 CPM let alone 120 CPM for a ROS campaign.

For example, BEST case scenerio that I can imagine for ROS banners:

200,000 Impressions
$120 CPM
3% CTR = 6,000 clicks
2% Conversion = 120 sales
cost per sale = $200

If I'm high or low on any of these numbers PLEASE let me know as I'm still learning! I know industry averages are all over the place, but IMHO I can't imagine any ROS campaign isn't going to get a CTR of higher than 2%. Am I wrong? I'm open to being wrong. It has happened before... once I think! ;)

So, if my numbers are close, then a company has to have a pretty high margin to cover their campaign.

From what I've read in here and other forums, it seems that CTR for ROS Banner ads is closer to .5% and conversion? Maybe around 1%? So, let's try with these numbers and $50 CPM

200,000 Impressions
$50 CPM
.5% CTR = 1,000 clicks
1% Conversion = 10 sales
cost per sale = $1,000

What do you think? Like I said, I'm sorta new at this, but this is what I believe the reality of CPM and CTR is these days.

[vik_c]

lol. Robster, I was going to post just the same thing but I thought it was just too obvious to bring up :) Those kind of rates would work if someone was selling maybe Ferraris or Boeings.

[Brett_Tabke]

Variations on punch the monkey are still pulling 10-15% on some sites.

[Artashes]

Robster, Vik_c,

I think you're bit hurrying in regard of those rates. You have to understand that such high CPM rates justify themselves (although they ARE a bit pricey).

Here is why.

Guys that buy such expensive advertising DO NOT make money from traffic. They don't even make online business their primary goal. Usually, companies that buy ads, sponsor sections for $100 CPM usually are already known companies and their primary goal is to advertise their BRAND, not their web site. They need exposure, they certainly do not care about the number of clicks.

Such could be IBM, Microsoft, Dell, Oracle, Home Depot, Coca Cola, Johnson & Jonson and such. We all know them, we all know how to find them on the web if we need to. They just try to remind themeselves from time to time to us to keep their names/brands in our minds so that when it comes a need to buy a service/product - our first thoughts will be about them.

I think we all should remember this when talking about these kind of buyers.

Best,
Artashes

[martinibuster]

They need exposure, they certainly do not care about the number of clicks.

It depends on the contract. I did work for a large news magazine in San Francisco, and sometimes they would guarantee a minimum number of clicks, but in most cases the contract guaranteed 400,000-900,000 impressions for a one to three month period.

These dollar amounts were in the tens of thousands. Sometimes came direct from the companies, very often from ad agencies.

There were also times when online ads were given away as a value-added service to complement print advertising.

To be sure, ad sales were nosediving this summer and fall. Scary.

[Robster]

Maybe I need to take some more marketing classes, but I'm not sure if $120 CPM for branding is going to pay off these days. I'm also still wondering how CPM online translates to freequency, scope, range, etc. for newspaper / magazine ads. (I'm trying to sell ads on my site to local businesses because my audience is local).

I'm a numbers kind of guy. Any quantitative reasons why Starbucks or GM would spend $120 CPM.

I just can't see it, but maybe I'm short-sighted.

[vik_c]

Artashes, if Coca Cola wants to remind people of its existence why would it spend $120 CPM doing so, when a lot of reputed banner networks will gladly sell advertising for as low as $1 CPM onwards. Cola is something everyone consumes, even those who play Bingo or visit poster web sites both of whom always have unsold inventory.

Exhorbitant CPM rates can be justified only where there's a niche market or very very targeted advertising or for very high value products where you need the attention of people with immense purchasing power.

Say, if GM was launching a new car, it could probably look at advertising on Fortune.com or Wallstreet.com at
$50 CPM, but won't advertise on a Bingo site even for $1 CPM.

[Robster]

Ok.. teach me something:

If we are talking BRANDING only, then in my opinion it's go to be the audience demographic that would pull in the higher CPM at sites like Fortune.com or Wallstreet.com right?

Just because a site has more visitors doens't mean it should get a higher CPM right... assuming the audience is the same. So why would Yahoo or any other big company that has such a diverse user base get a higher CPM than a more targeted base (without taking targeted keyword targeted ads into consideration)?

[Artashes]

Robster, I think the customer base and the prestigious status of the source plays its role as well. Take Fortune, for example. Most people who visit it are actively involved in business. A lot of CEOs and top managers read the magazine.

They know the magazine is very expensive to advertise at, so when they look through it (or the web site) and they see those companies who spend incredible high amounts of money to be in it, they logically assume the company is big enough and financially stable to do business with. There is a question of trust, image, loyalty, that kind of stuff.

Demographics, however, is a very important issue as well.

[martinibuster]

Definitely audience demographics are key.

Also, using the Doubleclick(?) Dart advertising system, we could target these people down to their zip codes, states, and countries.

[Artashes]

VIK_C, Coca Cola or GM would not advertise on any banner network because they prefer to be advertised on well known resources (maybe Wall Street or NYTimes), which are not the members of those ad networks. Why?

- they think it shows a poor way of conducting business - not being able to have an ad system of their own.
- $1-5 CPM rate will never even cover their server expenses.
- no one wants to share the ad revenue.

If they were members of FastClick for example, believe me, I would be the first in line to sign up for such banner network and advertise for $3-4 CPM to have that kind of exposure.

But as long as they have the largest visiting audiences and excellent reader's profiles, they will charge what they think is appropriate and what they think make the value of their own work equal to the value of being advertised.

Hey, there are always companies interested in buying a $120 CPM ad space. You just have to convince them that their campaign will bring results.

[Robster]

My wife just gave me permission to go back to school and get my MBA with an emphesis in e-com. marketing! ;) so maybe I can come back here and know what I'm talking about! ;) :)

Well...
$120 still seems high to me, but probably because I'm a finance guy learning marketing. My whole kick is ROI ROI ROI... NOW NOW NOW! I'm learning the long term, non - or harder quantitative aspects of marketing such as branding.

OK, back to the point of this thread, I too believe that there is some gas left in good ol' CPM. While I don't know all about marketing, I do understand that it takes a few ads and "impressions" in any media format to get a sale. Was it the last ad that made the sale or the totality of all of the ads? If 10 sites show affiliate ads for GM and I get the click that makes the sale, should I be the only one compensated? I guess we just hope that there are 9 other people out there that will eventually click on their ads to be compensated (thank you law of large numbers!)

Comments? I'm eager to learn!

Thanks again everyone for your suggestions!

[NeedScripts]

I will still stick to what I say, cuz, I have seen this rates at tons of sites. Here is a example of one of *very* well known company (Yahoo)

[solutions.yahoo.com...] (I am not sure if they would like thir url on WebmasterWorld or not, but I guess for example this should work)

Also, there are many reasons why such a high rates and why there are tons of people willing to pay such high rates.

Think outside of the box and you will find tons of places where the rates are very high and they have clients that pay them too.

P.S. I never said US$ 50.00/CPM should be the minimum for each site - I am just saying, prove yourself and people will pay you (generally what you ask for :) )

[europeforvisitors]

Needscripts wrote:

I will still stick to what I say, cuz, I have seen this rates at tons of sites. Here is a example of one of *very* well known company (Yahoo)

Your example is a Yahoo rate card from two years ago.

It's also worth noting that CPMs on a rate card are like "manufacturer's suggested retail prices"--i.e., a polite fiction unless it's a seller's market.

[NeedScripts]

Your example is a Yahoo rate card from two years ago.

I have seen atleast 10 other media kits where the rates are *pretty* high - and these are some good companies and from last what I checked those media kits are outdated either.

Like I said before, I will still stick to what I have to say - Cuz, if you prove clients that visitors to your site can help them grow their business, they will for sure give you money - Rememeber if you cannot sell it, then it would be wrong to say that the problem is in the product.

[Bernie]

i think there are two chances for CPM/banners:

1.
the extreme increase of CPC due to the bidding based systems of adwords-select, overture and espotting. in some areas CPC go up to 4-5 EUR easily.

many poeple complained when google decided to change adwords to adwords select. for competitive keyword-areas this complaint is rather understandable. :)

2.
the already mentioned soft-fact benefit: the branding

here is the question: how strong and how profitable is the impact of branding?

and if this benefit is big enough to go for it which are the companies that can afford this and need this today?

the first companies mentioned are big global brands. the problem here for a small to medium site could be the rule: big looks for big.

we may look for other criteria that describe the type of company that really profits from online-branding through banner campaigns other than pure size.

[Bernie]

@robster

from my experience the ctr in your worst case (0.5%) is not a worst case but a pretty good result for a regular campaign.

IMHO 120 USD CPM is a little high. :)

[bluelook]

Vizzavi - Portugal paid me $25 CPM in March/April of this year. They only wanted branding...

Nuno Oliveira

[bluelook]

CPC hasnīt worked here (Portugal) for now. All bigger campaigns are still in CPM.
I have regular disccount campaigns at $3 CPM. The bigger ones are quite rare, and normally only in the first 5/6 months of the year.

Nuno Oliveira

[Artashes]

Bernie, I agree with you on 100%. In fact, this is exactly what I meant, too. Although it's a very good point that the big buyers are looking for big sites in terms of advertising, I think there are interested buyers for all size sites. You just need to know your visitors well, look around for potential advertisers and build the offer in the best interest of both parties.

Bluelook, $25 CPM is not bad at all. I must say its an excellent deal. Although I have my doubts whether you know someone from the company that helped you gain special attention and why they went to you. How big is your site?

Best,
Artashes

[bluelook]

I have several sites, but the one in question isnīt very big. 100.000 unique visitors / 500.000 pageviews / month.
I didnīt have a special contact... they contacted my agency and chose my site among some others.
This was the better deal I made this year. After June the market here almost disappeared... only one permanent $3 dollar campaign remained. But that doesnīt cover all my banner stock, so things are a little rough, and I have to manage a lot other sites to have a decent revenue.

Sincerely,

Nuno Oliveira

[zeus]

Robster some of my advertisers have a CTR of 6%-8% and with about 250.000 unique visits a month thats a good deal for them, so it is possible to get a good ctr.

zeus

[Robster]

zeus - thanks for the post. Now, my question is, is that for a banner ad? Is it ROS?

I've only seen a CTR like that for popups, or text ads / button ads imbedded into content that would help gravitate users to want to click on the ad.

[zeus]

The best one is a normal 468x60 banner, text links dont work for me and I do think that the only way to use text links is to put those in a text, so it would not look like a ad.

zeus