Despite the increasing ability to deliver highly targeted marketing messages, the online advertising market will never, ever command premium rates.
We love that our clients are able to put analytics to work with campaigns in the online world that take advantage of increasingly sophisticated targeting capabilities and highly segmented audiences. But it's astonishing to hear the never ending lament from the online publishing side that rates are low and ad buyers just don't place a high-enough value on their product. The inescapable implication is that the marketers and media buyers just don't get it; that they're somehow not bright enough to see what targeting can do.
I'm sympathetic to being passionate about the value one brings to the table, but I think the ones who don't "get it" are those that believe buyers who are getting a great product at a low price are dim witted.
An Ad Age report this morning, Online CPM Prices Take Tumble, continues to attribute ever falling online CPMs to confusion about the superior value of the product. Here's the analysis, in brief:
Problem:
- CPM rates are in the basement, below $1 for remnant inventory.
- Sell through rates are so low, around 30% for some online publishers, that remnant inventory pricing is driving the market.
Diagnosis:
- Marketers who have become accostomed to using the web for high-volume, low-yield campaigns never developed the sophistication to take advantage of the better targeting that can generate higher yields.
- Too few publishers have the discipline to "stand up for themselves", sell to the value, and hold the line on pricing.
Solution:
- Better educate buyers about the superior value of highly segmented audiences and ever-better-targeted impressions.
- Be more disciplined about pricing, and refuse to give away inventory below its true value.
This analysis might hold water if not for the most critical characteristic of this industry: nearly unlimited supply at a marginal cost of effectively zero.