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Old 05-24-2001, 04:08 PM   #1
Registered User
Join Date: Mar 2001
Posts: 5
Exclamation CPM is Dead, Are you?

Hi All,

I've been lurking on the BB for quite sometime, and finally wanted to do some posting. http://geekvillage.com/ubb/smile.gif

I see a lot of posts on this board about the "state of the economy" and how it affects the Internet advertising market. I think, in my opinion, that many of you are misinformed about the realities of the Internet advertising market. And I would like to shed some light, or attempt to, on the actual situation.

* Let me preface this by saying that I have been involved in Internet advertising/marketing since 1994, and have made my sole living from it since that time. I went from zero to having made several million dollars online during this timespan - without stock of anykind; talking merely profits. I don't say this to try and "impress" anyone or anything else - in fact, the email address I am using is in no way connected to me personally (i.e. through the domain name, company, etc. - it belongs to someone else that I consult) and I am pretty much posting anonymously. I am not here to promote ANYTHING that will bring me even one penny of financial gain, I am just here to post my opinions and experiences and hopefully it will help others. My own network of developed web sites has reached over a billion unique visitors since inception - and none of them are adult related. I won't mention any of them here, but many of you have probably used some or most of them.

The current Internet advertising market is NOT being driven by the stock market. Surely, when the market is on a strong uptrend companies spend more on advertising - I am not disputing this fact. However, the bulk of what's driving the pricing levels of online advertising today is simple - SUPPLY AND DEMAND.

On a banner impression basis alone, there are for more available impressions than what the market is demanding. There are now MILLIONS of web sites generating pageviews and traffic and trying to monetize the value of those pageviews by serving banners - or other forms of advertising. This massive oversupply has driven down the value of the traditional CPM-based banner impression value. It is only a matter of time before CPM rates for banner impressions in general will be about 10 cents. And because of this, CPM buys will DIE. Within 2-3 years, no advertiser will buy advertising online on a stricly CPM basis. GUARANTEED. What will happen is that advertisers will begin buying advertising in more of a hybrid structure - such as partial cpm/cpc/cpa. But the bottom line is, the time has come where the advertiser will no longer assume ALL OF THE RISK. The "risk", i.e. performance of a campaign, will now be shared by the Publisher - i.e. Web site owner with the traffic.


Performance Marketing is taking over the Internet, and *IS* the total future of our medium. Performance Marketing, aka affiliate programs or deals where a commission is paid only AFTER performance is achieved, is the future. Either embrace this as a Webmaster, or get out of the game if you expect to make any money.

Performance Marketing is a beautiful thing for a business. They basically say, "I'll give you $1 for every $1 in profit your action will make me". How many TIMES do you think the business would take that action? They will take ALL THEY CAN GET - because they make money guaranteed. Performance Marketing allows the advertiser to structure something upfront that will only bring them a positive ROI on each dollar that's spent - unless they're idiots. This is a NO LOSE situation for advertisers. Never before in the history of business has there been such a strong marketing channel for ANY COMPANY to utilize. Every action, every step, everything is fully quantifiable and makes a positive return if they accurately set the performance marketing payout in advance.


The bottom line of everything is still this, WHAT *EFFECTIVE CPM* are you getting for your traffic? Effective CPM meaning even if you sell your banners on a CPC basis, or straightup cost per sale basis, it can still be calculated back to how much money that produced for 1,000 banner served - giving you your "effective CPM" return. The sole key to each and everyone of us in this great "Game" of Internet marketing/advertising, is to maximize our profits through the strongest monetization of our traffic possible - i.e. making the most from our pageviews and userbase. It really doesn't matter if you are able to do deals on a CPM, CPC, or CPA basis, as it all comes down to how that equates for an effective CPM for your ad inventory.


Many web sites will go out of business because they will not be able to effectively monetize their traffic to support their sites. Right now because of the oversupply of banner and other ad inventory, the advertisers are in complete control. They are paying as little as possible and getting many takers.


This lowballing of the current group of major advertisers will not last forever. Just like with radio and TV advertising before it, it sharply rose, then took a nosedive, then advertising rates "settled". As more and more companies come to the Internet to market (through performance marketing) they will have no choice but to pay higher commissions or no one will promote them - webmasters will be busy promoting higher paying programs. This overall trend will give webmasters some of the "power" back and will force advertisers to payout higher commissions and thus will steadily raise the value of the effective CPM.

It is up to you to work hard to figure out the performance marketing campaigns that will produce the most for your web site based on its content and user-reach. If I could give any of you some advice it would be to look into establishing RESIDUAL INCOME STREAMS. Look into promoting programs that will pay you again and again for work you did ONCE. Build up a steady residual income stream that will at least pay your core expenses, and then once that is done everything else is pure gravy. You must make one dollar before you can make one million. No one has EVER done it otherwise.

Thank you for reading my rant, and I hope some of you got something from it. I wish everyone on this BB the best of luck with their online ventures.

deemis is offline   Reply With Quote


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