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Old 10-05-2001, 11:11 PM   #1
Czar

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Default The "CPM vs CPA" Debate Continues

In a risky strategic move given the domination of direct-marketing players in the online ad scene, Interep's interactive division - which holds significant stakes in Winstar Interactive, Cybereps and Perfect Circle Media as well as a minor holding in BURST!Media - has issued a message to its various sales forces noting that they should reject any and all CPA-based campaigns that aren't backed by a minimum cash return guarantee.

This move is being made in an effort to make marketers more accountable for their ability to convert or to otherwise monetize their campaign, rather than leaving the majority of the risk in the hands of the publisher. And though it does establish Interep's companies as specialist CPM brokers, it is clearly a risky undertakinig by the company in the hope that this decision will stimulate a medium-long term mindset shift regarding the models that should be adopted in the online space.

Anyway, for more info, check this out:
http://www.internetnews.com/IAR/arti...897991,00.html

(BTW, the decision will not affect BURST!'s service, but is aimed at the company's majority-held elite representation services at this stage)

Thoughts?
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Old 10-05-2001, 11:28 PM   #2
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I think it's a great idea that the two forms are being merged together a campaign that guarantees a compensation CPM rate will definitely work harder to generate solid CPA results in my opinion.

Let's just hope several more networks follow.
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Old 10-05-2001, 11:57 PM   #3
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Well, the whole theory behind CPM is that it provides 'Branding'. Only in special cases do I actually think this works.

Seriously, if your banners shows on 400 different sites of different types, to a wide range of demographics, just how much are you going to benefit? I can see the value of buying CPM ads on individual sites, but not on a network.

I've been on both sides - I've made lots of money showing ads, and I've also spent lots of money to show ads on other people's site's for my own sites. I don't do it for fun, I don't do it because I think its neat to see my banner on other sites, and I don't do it because I think it makes me popular. I do it because I want to make money, no other reason.

Is this fair? I think so. CPA is a good balance - you can analyze my offer and see if you think it will do well. You then send traffic and if I make money, so do you. You can control how you present it to your viewers, you can control how many viewers are exposed to it. Its not in my interest to make it hard for you to get a lead - I don't make money unless you do! And I want YOU to make money, because the more money YOU make, the more money I make.

With CPM, you the publisher have NO incentive to make my ad produce for me. You stick it on the very top and tell your visitors all about it, you make not a cent more than if you buried it 9 miles down your page. You don't get my CPM ad for very long, because I go out of business.

CPM does make sense if you buy ads on a highly targeted site. Me buying CPM ads here on Geekvillage for my scripts I sell would make sense, and I could probably make money that way. Buying the same ads on a network where I'm advertising my PHP scripts to a Britney Spears audience makes no sense whatsoever, and my days in business are numbered.

I think you'll see more and more performance-based marketing as time goes on. As an advertiser, I love CPA advertising. As a publisher/affiliate I also like it. When I can make a decent amount of money sending sales to someone, it makes me feel good because I know that they aren't suddenly going to disappear because they are in bankrupcy court now!

CPA stuff with a guaranteed minimum may be a good idea though, so long as the advertiser can be reasonably sure their ads will show up on sites that actually have a chance of producing results.
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Old 10-05-2001, 11:57 PM   #4
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Overall, I have to agree with Intereps decision on this. It is the marketers responsibility to create a campaign which yields a good conversion ratio.

The whole concept of branding ads is almost a total waste on the internet; its no wonder that the companies that run these branding ads soon end up crying the blues of no sales, no conversions etc. They put nothing out so they get nothing back.

The analogy I'll use is to my own offline advertising I sometimes do in local papers, by way of flyers etc. It costs $44.00 per CPM. They do not care if I leave the page blank or just put a logo on it or list a dozen interesting bargains. They also don't care who lives in the houses it gets delivered to.

Ususally, along with my ad are also ads from Walmart, Sears and 2 dozen other businesses. They all pay the same rate or more. I've never yet seen Walmart, Sears or any other of the big names attempt to send an empty piece of paper in a flyer, hoping that just the name printed on a page would get people in the door.

As for internet advertising, I think eventually the best model will be a hybrid of CPM/CPA. Say like a 5cent minimum CPM with some performance bonus on a CPA basis built in. The advertiser would still be able to get rid of poorly performing sites without ripping them off for the ads they delivered already. The advertiser might even choose to keep advertising at those low rates if they wanted.


That's my 2cents.
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Old 10-06-2001, 01:21 AM   #5
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This is the sweet song from: http://www.internetnews.com/IAR/arti...897991,00.html

"Our sites do not want this business," said Durham, who is also president of WIM. "This is not advertising, this is outright thievery. CPA campaigns ... take up an incredible amount of inventory for which our clients receive no compensation and the sites have to eat ad serving costs. With these campaigns we take 100 percent of the risk and the rewards are few and far between. They are simply not worth our blood, sweat and tears."

and this was my opinion at:
http://www.geekvillage.com/forums/sh...5&pagenumber=2

"Every single media [newspaper/TV/radio] out there is paid on reach [impressions/views/so on]. Why should be the Internet different? It is the merchant job to determine the best way to get an action [call/fill-up form/sale] from his/hers advertising efforts. A publisher can send thousands of leads to a merchant site but has no power over the merchants’ intentions, site design, business plan, customer service, and availability of service/product.

Now talking about the cookies. This is just BS. I clean up my Internet cache every few hours [automatically]. There are few cheap/free products that will do that. I am not doing it because I hate the publishers and love the merchants but to keep my machine(s) in top shape. So the 1,2, 7, 45 or 365 days cookies are [deleted] history. I maintain few other machines as well. They get the cookies ‘wash’ over night so the publishers are ******* again [no cookies no commission – how convenient].

I will have to agree with ‘FreeArcade’, CPA is just free advertising. I [will] use strictly CPC – including PPC search engines [I sent you an interested surfer – you have to pay me], CPM [I showed your crappy banner on my site – you have to pay me] and Sale of my own product/service."
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Old 10-06-2001, 03:53 AM   #6
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I find it really funny when big ad companies reject CPA saying that they just loose money and are a huge risk. Personally I thinks it makes perfect sense that burst should be only CPA based.... after all, if a site can't generate any leads, why would anyone want to advertise there? It's not like it has to be a sale, even a user signup is a lead but god.... saying that there's no money in cpa is like saying that your viewers aren't spending money, aren't signupng up for services and basically are profitless.... why would anyone want to have them visit?

CPM is branding but you only want to brand targeted people, people who may buy your product; which means that the same people viewing a cpm banner should be those following through with cpa. If burst can't generate money with cpa then burst's views aren't worth being into.

As for other sites... think about it like this, my new cpa deal is going to offer something like $50 per lead ($100 for the plus program).. lets say that it gets a mere 1 in 10,000 sales (maybe that’s still too high?)... that means that the webmaster would still be averaging a cpm of about $5... now lets say its 1 in 100,000 leads (or about 0.00001%)... that’s still a $0.50 cpm... beat that burst. Granted some people would never refer me a single lead and most programs aren't for $50 but the point is for any advertising to work BOTH parties must make GOOD money. Advertisers need merchants and merchants need to sell the advertiser's service or product. Large companies that try and present CPA is evil simply aren't getting the type of traffic (or the type of ads) that convert to sales making their views worthless to their existing advertisers.

sorry about the spelling/ grammar/ logic... its late
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Old 10-06-2001, 03:55 AM   #7
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As for the problem with tracking... cookies, etc... that is OBVIOUSLY an issue which needs to be fixed

This is not however always a huge problem... most people don’t empty their cookies out every day, most people don't know what cookies are or how to stop them. However there needs to be a technology all around like cookies but more efficient which would store a few variables and not be wiped. Advertiser's can try to match ips and computer names but in a world of dialup, that doesn't work too well either.

Then there's the idea of corruption, evil merchants and what not... those issues are even more valid but the simple idea of market competition should eliminate them almost 100%. Just imagine if all ads became CPA in the next few months, companies who were even believed to be cheating would see all their advertisers walk away and leave them in the cold just because they have a thought that the advertiser might be up to no good.


That's the advantage to a system LIKE CJ as well... something more or less 3rd party where the merchant prepays t get in, the company runs their affiliate tracking and fraud becomes hard to get away with. Basically it all gets back to the market controlling its self as company X, Y and Z team up to stop advertiser A, and move to advertiser B.

On a final note (almost) the Internet is not print media/ commercial TV, nor is it close. In many ways they are similar if not even the same but in many ways they are the opposite. Even if you don’t agree with this idea you must recognize that on TV, only the biggest names can afford an ad and that makes branding possible. Branding does not exist when 30 companies which almost no one has heard of run a few SMALL banners on some sites. Branding works on the idea that you see an ad for coke then when you go to the store you buy some coke on sale. Branding does not mean you see 500 ads and remember their url… that’s just not going to happen so until all internet ads are for products you can buy nation wide, cpm banners and traditional advertising can not be considered close to the same.

And now I conclude with this idea... what good is an interested person, an eyeball or a brief click if that person doesn't make a transaction.... how can companies continue to advertise if they pay for useless hits with no profit to show from their expenses... simple -- they can't and that’s a major reason why the NASDAQ is down a few thousand points.

Last edited by Ted S; 10-06-2001 at 04:07 AM.
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Old 10-06-2001, 04:19 AM   #8
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In the last thousands years we just changed the forms of our problems. No solutions. Why should be the Internet so revolutionary?
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Old 10-06-2001, 04:27 AM   #9
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Because the Internet isnt like the last thousands of eyars... for thousands of years a few have been at the top... there are always a few major players, major companies, major products... the internet allows BILLIONS of people to see HUNDREDS OF MILLIONS of small comoanies, big companies... thats a new concept and like i said before.... you can't expect a person to be branded with 500 new companies from a few small banners.
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Old 10-06-2001, 04:37 AM   #10
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Quote:
If burst can't generate money with cpa then burst's views aren't worth being into.
I just have to jump in to again reiterate that Interep's decision will not affect BURST!Media, in which the company is but a minor shareholder.

Perhaps I wasn't clear about this, but the only companies that have been directly ordered to reject most CPA campaigns are the media representation firms in which Interep has a majority holding (primarily Winstar Interactive and Cybereps).

Nevertheless, this seems to be bringing forth some great points (both old and new) about this important issue, so keep them coming!
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Old 10-06-2001, 04:41 AM   #11
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It is still the same old stinking village called earth. We know all the tricks

Last edited by ref; 10-06-2001 at 04:59 AM.
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Old 10-06-2001, 05:10 AM   #12
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Thanks for the clarrification Czar.... of coruse it doesnt matter if it's burst or xyz company... but i dont want to stigmatize a company for something they didnt do.....
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Old 10-06-2001, 07:12 AM   #13
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Quote:
Originally posted by Ted Sindzinski
I find it really funny when big ad companies reject CPA saying that they just loose money and are a huge risk. Personally I thinks it makes perfect sense that burst should be only CPA based.... after all, if a site can't generate any leads, why would anyone want to advertise there? It's not like it has to be a sale, even a user signup is a lead but god.... saying that there's no money in cpa is like saying that your viewers aren't spending money, aren't signupng up for services and basically are profitless.... why would anyone want to have them visit?
The ad company still has to pay bandwidth, hardware, etc for CPA campaigns.
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Old 10-06-2001, 09:36 AM   #14
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CPA is the biggest ripoff. Just because you can track it one way directly, doesn't even begin to measure how much that publisher has done for your company. Branding is more important than people realize. Athlete's get paid millions just to say, "I use this product, you should too". That is nothing but pure branding, and this is exactly how NIKE got as big as they did. They did enough branding, that they were able to charge more for a pair of shoes and get it. Think about "Air Jordans" that sold for $150 a pair. They sold for that much because they branded Michael Jordan with there product. You could buy the same quality shoe, for $60 from the same company. That is how much branding helps.

Another example is "generic" brands. These products are almost the exact same if not the same as the higher price brands. What makes the difference? BRANDING!!!, The higher priced brand name pays for ads, puts up branding commercials, and thus people unknowingly think it's better, and they pay more for the product, and they buy more of it.

Why do PC's sell more than MAC's? It's not because PC's are better, it's because it is branded so much more than MAC's. I see 100 commercials that are PC related for every 1 MAC commercial. If branding were useless, then MAC's would sell more than PC's. This obviously isn't the case.

The decline in people buying online is not because branding doesn't work. It is because the economy slowed down. Most people use CPA because they either can't afford a real branding campaign, they don't understand how effective branding can be, or they just don't understand how to properly market their product.

Also, you can't track every sale the person generated for you. You can't track how many sales the person generated for you but was lost because something on your website drove them away like links of site, etc. 95% of CPA deals are rip-offs in my opinion.

Now the other 5%. Their are some CPA deals out there that are great. They are few and far between, but they are out there. They have 1 goal in mind, sell the product that you are trying to sell. I use some CPA deals, but I don't consider what I do to get the results advertising. It is more along the line of "salesman". I would never run a CPA deal as a banner, banners are for advertising, CPA's are for salesmen.

I could go on and on. But in the end, I think branding is under-rated. Branding does more than get sales, it brings demand. Branding lasts for years, while a salesman's bs is gone after 30 minutes.

"Where's the beef?" - What company came up with that 20 years ago? I can remember, can you? I haven't seen it in years, but I remember it. That's what branding brings.
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Old 10-06-2001, 09:39 AM   #15
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Economically CPM beats CPA hands down. With CPM those marketers getting paid $70,000+ for their expertise will have to worry about the conversions. Let's say you have 1 advertiser who is advertising on 10,000 websites. Now if that advertiser can make noticeble ads that will catch people's attention and their site sells (most sites i've seen still need a lot of work) they should be able to sell whatever they're selling.

The merchant makes a profit the publishers earns money and it's all good... In that scenario 1 advertiser the merchant worries about getting the sales and the publisher worries about his or her content and traffic. Not only that but 10,000 entities won't have to worry about marketing the same product/service separately. Only one entity(the advertiser) worries about this and the research it does is passed down to all 10,000 sites. As a whole this gives the ten thousand publishers more time to do better things. This makes the process alot more efficient in the end. Of course it's not always a 1:10,000 ration but the advertisers are almost always fewer then publishers and by a large margin.

Now here comes CPA, in this scenario the publisher has to market the product/service while the merchant sits around with no incentive to make a site that really sells. This is THE most inefficient process in the net. You have one advertiser and 10,000 publishers again. Of the 10,000 only around the top 10% succesfully market the ads and the other 9,000 will basically waste alot of bandwidth with useless adviews. Instead of one entity researching we have 10,000 entities researching and not always collaborating. Infact MOST of those publishers aren't collaborating. This hurts the advertiser with wasted bandwidth (from ads, and page visits) and wasted server resources such as memory and processing. The publishers wasted alot of time, 10,000 X 2 hours equals = 20,000 hours lost as a whole for this economy. We've got to makes this process alot more efficient then this for it to work.

As far as the Britney Spears remark goes I despise the singer and her fan websites BUT that is a personal opinion and in NO way should it affect anyone's view of them as far as the $$$ factor goes. Fortunately for them, their are more people wanting Britney merchandise in the form of cds, posters, and whatnot then people wanting php or any scripts. It's how to make money from the websites that's hard and targeting is only the first step...
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