<Online ad inventory is currently in high demand. There is also
predicted to be high demand for brand advertising.
From a publisher?s point of view, CPM is the best model. You get paid
for showing the ad regardless of how successful the advertisement or
the advertised product is. You are not reliant on users clicking on
the advert or buying the advertised product. You know in advance how
much you will earn. CPM advertising also tends to be used for brand
awareness. Increased demand for this type of advertising will push up
prices.
Getting the highest possible prices with CPM means knowing your
audience. If you can show that your site users belong to a particular
demographic group, for example people earning over $100,000, dog
owners, women aged 18 to 24 etc. then you can sell ad inventory at a
premium price to advertisers who want to target that group.
CPC and CPA models are better suited to low traffic sites. With CPC,
if an advert is ineffective few or no people will click on it. If the
ad is not relevant to your users you will earn little money.
With CPA, you are dependent on whether or not your audience is
interested in the product offered by the advertiser. It needs them to
either show an interest in registering or to buy the product depending
on the type of campaign. If the product is not appealing to your
audience or if the ad does not get them to click through, you will
earn little money.
CPA can give high returns but this requires some effort on the part of
the publisher. You need to know your audience extremely well and to
match your advertising to their needs. If the product advertised is
something that they are highly likely to buy then you can earn good
commission.
It pays to experiment with ads. Run as many CPM ads as possible at the
highest prices that you can command and use CPC and CPA ads to fill
the remaining ad inventory.
Check that the ads served do not affect your users use of the site.
For example too many flashing ads may be a distraction
Sources:
Online ad inventory already scarce.
According to the Wall Street Journal, ad inventory on the front pages
of major portals like Yahoo, AOL and MSN is already sold out for many
months in advance, and prices have increased 20-30% over 2004. This
scramble for ad space has affected smaller niche publishers as well:
third party auto sites like Edmunds.com and Kelley Blue Book have
already sold up to 90% of their ad space for the next year.
http://www.heartbeatdigital.com/intellibeat/displayAlert.asp?page=242
Get CPM if you can. Advertisers can drive hard bargains at present,
but you'll not make much money if you accept payment for action
(either click through or commission on sales) or allow excess pages to
be sold off cheaply at CPMs of a few dollars. Persistent and
aggressive marketing is essential. Letters and emails may prepare the
way, but generally you'll have to phone the decision makers in sales,
armed with statistics and persuasive answers. It's hard work, and a
trained salesperson can be a real asset.
Source: ECD
http://www.ecommerce-digest.com/persuasive-advertising.html
Research, Grahn (2001), indicates that when banner ads are priced
based on performance, even when using the most sophisticated tracking
technique, delivered banner advertising inventory is undervalued by
about 35%, relative to comparable CPM rates.
Source: Pricing Digital Marketing: Information, Risk Sharing and
Performance. Arun Sundararajan.
http://66.249.93.104/search?q=cache:XYmoFUlGfbwJ:oz.stern.nyu.edu/papers/pdm0603.pdf+advertising++%22cpm+prices%22+2006&hl=nl&ct=clnk&cd=17
In 2006, advertiser focus will be more on the audience itself and less
on where or how the audience is captured. There is a nearly unlimited
supply of ad impressions, but a limited number of Internet users. With
growing Internet adoption rates, advertisers have gravitated to a
handful of popular sites or portals in hopes of reaching their
intended audience though this narrow tract of ad space.
Next year, advertisers are going to take a more holistic approach to
reaching their audience. Rather than purchasing high-CPM ad buys on
high-profile, heavily trafficked sites, advertisers will merge
behavioural, demographic and geographic methods to generate better
results across a wider range of niche sites. In addition, audiences
will be segmented similarly to the offline market so that tried and
true methods, perfected over decades, can be applied to the online
world.
Source: Top 10 trends for online ad market in 2006. Netimperative
http://www.netimperative.com/2005/11/10/ad_market_trends/view
The percentage of media budgets allocated to online has jumped from
8.3% in 2004 to 14.1% in 2005, and is projected to continue climbing
to almost 19% in 2006. Source: AAF: Advertising Trends 2005.
http://blog.digitalaxle.com/2005/11/index.html
From a publisher?s point of view, CPM is the best model. You get paid
for showing the ad regardless of how successful the advertisement or
the advertised product is. You know in advance how much you will earn.
CPM advertising tends to be used for brand awareness.
With CPC, if an advert is ineffective few or no people will click on
it. If the ad is not relevant to your users you will earn little
money.
With CPA, you are dependent on whether or not your audience is
interested in the product. It needs them to either show an interest in
registering or to buy the product depending on the type of campaign.
If the product is not appealing to your audience or if the ad does not
get them to click through, you will earn little money.
CPA can give high returns but this requires some effort on the part of
the publisher. You need to know your audience extremely well and to
match your advertising to their needs. If the product advertised is
something that they are highly likely to buy then you can earn good
commission.
CPM ? cost per thousand impressions. The amount paid for showing 1000
ads. $1.00 CPM you earns you one tenth of a cent for each ad viewed.
A total of $1.00 is earnt for one thousand ads viewed. Often only
unique impressions are paid ? you will only be paid the first time
each unique user views an ad.
CPC ? cost per click. You are paid everytime a user clicks on an ad ?
usually for the first unique click from a user. CPC presents an
element of risk. If no-one clicks on the ad you earn nothing. They are
generally more profitable if an ad?s target audience matches the
audience of your site, you can often earn more than low end CPM ads.
The performance of CPC ads will vary widely between particular ads and
particular sites. CPC ads are often discussed in terms of effective
CPM. This is hge revenue an ad has earned you based on the number of
views.
CPA ads are typically used with affiliate programs. There are two
types of CPA campaigns.
Cost per lead: you are paid each time a user signs up or provides
contact information. They typiclly pay between 50cents and $3.00 per
sign up.
Cost per sale: you are paid each time a use buys a product. The
commission is usually a percentage of the price. The effectiveness of
a CPA campaign is dependent on your audience. It is possible to make
more money from CPA campaigns if you closely match the progams to the
needs of your audience.
It pays to experiment with ads. Run as many CPM ads as possible and
use CPC and CPA ads to fill the remaining ad inventory.
Check that the ads served do not affect your users use of the site.
For example too many flashing ads may be a distraction.
Source: Web Advertising Basics: Overview of Ad Revenue models.
http://www.wsworkshop.com/money/ad-revenue-models.html
According to Advertising.com, brand advertising is on the rise.
http://66.249.93.104/search?q=cache:thfWMCIJMS0J:www.advertising.com/Press/06Mar08.html++cpm++advantages+2006+advertising+publisher&hl=nl&gl=be&ct=clnk&cd=6
According to this report twice as much money will be going into CPM
advertising than is going into search.
In 2006, 72% of marketers plan to increase online budgets. Within
Internet spending, the specific media that will receive the greatest
share of marketers? online budgets in 2006 will be
Web sites ? 30.3%
Sponsorships ? 10.3%
Source: AVC.
http://avc.blogs.com/a_vc/2006/01/will_2006_be_a_.html
The more relevant an online target, the higher CPM rates a publisher
can demand of its advertisers.
Source: Ad Serving and Emerging Media. Jeff Wood. March 29, 2006.
http://www.imediaconnection.com/content/8821.asp
pk synths reports that CPM advertising is a lot more profitable than PPC.
His PPC income is around $5k and CPM income is almost $300k per month.
Source: Search Engine Roundtable.
http://forums.seroundtable.com/showthread.php?t=561&page=2
Content/media sites can command higher CPM rates by directing
advertisers to more targeted audiences. They do so by utilizing
visitor segmentation techniques.
Source: Matching inventory to advertisors needs.
http://websidestory.com/promotions/web-analytics-ebook/sample/matching-inventory-to-advertiser-needs.html
In online advertising, inventory is segmented into classes based on
targeting a specific audience. Targeting a particular section of the
site or a particular demographic would cost advertisers more than
running a run-of-site campaign. That?s a good differentiation of
classes since advertisers are willing to pay more for targeted
audience.
The next step is to limit the amount of inventory that is allocated to
each class. For example, publishers may allocate up to 10 percent of
their inventory to be sold on a run-of-site basis, while the remaining
inventory should be sold targeted. The targeted inventory could
further be allocated to the sales organization by different audience
types.
Source : The Challenges of Yield Management. Oren Netzer.
http://www.imediaconnection.com/content/4976.asp>
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<Hope this helps.> |
